5 Myths About Forex Trading

1 – If I know how to trade stocks, I know how to make Money on Forex:If you have experience trading stocks and think you can simply apply your knowledge on Forex and make money, you’re going to be disappointed. The truth is the Forex market is completely different from the stock market. Firstly, the Forex market is open 24 hours a day. This may not seem a big deal but it’s a significant difference in relation to the stock market. As the Forex market is open 24 hours a day, this brings more complexity to a trader. If in the stock market you have periods of higher and lower volatility, in the Forex these differences are even higher.Many stock day traders think the Forex market is easy because it is open 24 hours a day. They think about it this way because, in their heads, this way they can trade whenever they want and make their quick bucks. Truth is you can make money in the Forex. But for that, you need to have a deep knowledge about this market. You have to know the best time to trade Forex in order to adjust your strategy to this market.Besides this, the same indicators that work in stocks don’t always work in Forex. The Forex market is more complex and, this way, the indicators don’t work so well.Another big difference between stocks and Forex is the brokers. In the Forex market, due to the lack of regulation, a lot of Forex brokers don’t act in the best interest of their clients. It’s a lot more difficult to find a good Forex broker than a stock broker. As it is essential to find a good Forex broker to make money in Forex, a trader will have to work harder on this. 2 – Since the market is open 24 hours a day, you can make Money anytime you want:Once again, this is not true. In order to make money, a trader needs volatility. Although this market is open 24 hours a day, in the majority of the time there isn’t enough volatility to make good trades. The market being open 24 hours a day is a big challenge because volatility can appear at any time within this large time span and the trader can’t be watching the market all the time. He has to adjust his strategy in order to only trade in the high volatility periods.3 – Comission trades are free on Forex market: Are commissions free on Forex? Not exactly. You don’t pay a fixed commission when you place an order. Although, you pay the spread, which is the difference between the bid and the ask.By paying this spread every time you place an order, as in other financial markets, as more trades you place, the bigger the costs you have. This way, as the number of trades executed increases, the harder it is to make money in Forex.In the Forex market, as in any other market, a trader must avoid the overtrading at all costs.4 – You need to predict what will happen in order to make Money in forex:In order to make money in Forex, you need to react to what is happening. This is not the same thing as predict. A good trader simply reacts to whatever the market is telling him. He analyses charts, reads the news and all information he has at his disposal in order to react as fast as possible to the market movements. A good trader is always looking to evolve and learn. He is always looking at the more recent Forex systems and courses released to keep learning. 5 – The more complicated my strategy, the best:This is another myth that has nothing to do with the reality on Forex trading. The truth is that usually the simple strategies or systems outperform the complicated ones. So, there’s no need to use plenty of different indicators at the same time. Study the market, find your favorite system or strategy, and stick with it.