4 FX Trading Fallacies To Be Wary Of


When the newcomer thinks of FX trading, they immediately conjure up images of intelligent bankers carefully pouring over a duo of trading stations while pulling up various charts that are blotted with complicated looking prices and indicators. This often leads them into the unwitting belief that they could not possibly trade FX for themselves. This is anything but true. Whether you’re looking at FX trading as a way of embellishing your income, or you’re a seasoned trader/investor looking to diversify into currency – it can be surprisingly simply to hit the ground running. In this article we explore a number of myths to be wary of when entering into the FX trading arena for yourself.

4 FX Trading Myths To Beware Of

1. Only The Exceptionally Wealthy Can Realistically Afford To Trade FX. One simple word completely pulls apart this argument – leverage. Thanks to the high levels of leverage that many brokers now offer, traders can begin trading with the smallest levels of capital – as low as a few hundred dollars. While this may seem exceptionally good news, newcomers to FX trading must also appreciate that leverage is the sharpest of double edged swords. Just as leverage can magnify profits, so it can work to magnify losses too. The solution? Know what you’re doing within the FX markets when trading on high leverage!

2. FX Trading Allows Anyone To Get Rich Quickly. Unfortunately, there are no reliable ways to “get rich quick”. FX trading is not all that different to running a business – you need to know what you are doing, be prepared to take odd losses and be ready for hard work in order to attain long term success. There will always be extremes – the odd trader who through a mix of aggression and incredibly kind fortune managed to escape with a small fortune in their first trading month. This will always be balanced by another trader who went to the markets with the same “all or nothing” attitude and got utterly and brutally whipped.

3. People Who Have Invested In Stocks With Success Have A Natural Advantage To Those Who Try FX As Their First Trading Venture. Stock trading and FX trading are wholly different. Each requires a very different and distinct skill set and mind set. People who dabble in stocks with some success are often prone to waiting months if not years for their successes to come in. With FX trading, positions are commonly opened and closed within days or hours, if not minutes. In some ways, since newcomers to any form of trading come with a completely malleable mindset they can often find it easier to grapple with the unique concepts and demands of FX trading as opposed to experienced stock investors.

4. It Takes Someone Highly Intelligent To Be Able To Understand The Money Markets & Trade FX. One of the more interesting aspects of FX trading is that the majority of trading decisions are arrived at by looking at technical analysis (charts). Many forex traders know little about the drivers behind currency movement, but are able to make profits because they can gauge price direction simply by looking at the charts.



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