Are you thinking of investing in forex? This article looks at the most common foreign exchange market myths – and debunks them along the way.
The average daily turnover in the foreign exchange market is $5.3 trillion.
FOREX is the largest financial market in the world. With a market that big, there are plenty of opportunities for both new and old traders. Before you start asking yourself how does FOREX trading work, try getting some of the myths out of the way.
Read below to learn more about the explanation behind five foreign market myths.
1. You Can Get Rich Quick
The foreign exchange market has continued to grow in popularity. With that popularity comes marketing schemes claiming you can “get rich quick.” While there is no doubt FOREX trading can put some extra money in your pocket, it takes time.
The biggest thing to keep in mind when you start trading forex is consistency. The successful people in this business make trade after trade until they see results. Don’t walk away from the table early or you’ll miss out.
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2. Predicting the Market Is How You Make Money
Some people claim that they can predict the FOREX stock exchange. What those people don’t tell you about is all the times they predict wrong and their plan backfires.
Save yourself time and money by sticking to your rational judgment. The market is always moving and isn’t predictable.
If you do have a gut feeling about an outcome, wait until the market proves your prediction correct. Then you can act fast and reap the benefits without any risk.
3. The Market’s Rigged
People hate to admit they made a wrong decision. Instead, they blame it on a rigged market.
The foreign exchange market isn’t rigged. The market’s determined by hundreds of thousands of transactions every day. Approach the market with a business-like approach and you will see results.
4. Follow Someone Else’s Plan
It’s smart to get into the FOREX market with a laid-out plan. But following someone else’s plan can be a huge mistake.
It’s your money that is being risked. It’s up to you to develop your own system and strategies for dominating the market. To start with you can take aspects of several plans and form them into your own until you figure out what works.
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5. It’s Only For Short-Term Traders
While short-term trading has grown in popularity, FOREX works best in the long-term.
Concentrating on the big picture and not daily fluctuations will see better results. Long-term traders will also avoid falling victim to short-term impulses.
While you can make money with short-term trading, long-term trading produces long-term results.
Learn More about the Foreign Exchange Market
Now that you’ve cracked the foreign exchange market myths, you’re ready to trade.
Keep in mind these beginner mistakes as you move forward:
- Trading too often
- Excessive leverage
- Trading several markets
- Being overconfident
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