The main myths related with Forex trading
1) “If you know how to trade in the stock market, you know how to make money in Forex”
If you have experience trading with shares and you believe that you can simply apply that knowledge to make Forex Trading, then you will be very disappointed. The truth is that the Forex market is completely different from the stock market. First, the Forex market is open 24 hours a day, this may not sound like much but is a significant difference in relation to the stock market. As the forex market is open day and night, it brings more complexity to a trader. If the stock market has periods of higher and lower volatility in the Forex these differences are even greater.
Many stock market traders think Forex is easy because it is open 24 hours a day. Think this way because they think they can work whenever they want and make money fast. The truth is that you can make money in Forex. But for that, the trader needs to have a deep knowledge of this market. The trader has to know what would be the best time to get in or out to adjust its strategy for this market, even if he or she uses indicators, as not all work safely in Forex.
Another big difference between the Stock market and the Forex Markets are the Brokers. In the currency market because of the lack of regulation, a lot of Forex Brokers do not always act in the best interest of their clients. It is much harder to find a good forex broker that one of the stock market. As it is essential to find a good Forex broker to earn money, a trader will have to work harder on this and be careful. In other words, do your homework searching for a good Forex broker.
2) “Since the Forex market is open 24 hours a day, you can make money anytime you want”
Once again, this is not true. To make money, the trader needs volatility. Although this market is open 24 hours a day, most of the time the volatility is not enough to provide good opportunities to trade. The fact that the market is open day and night is a big challenge because instability can occur at any time within this period. A Forex Trader then must adjust its strategy to periods of high volatility. These periods usually occur during the opening hours of the biggest Stocks Markets globally, ie USA, Europe, and Japan.
3) “You need to predict what will happen to make money in Forex”
To make money in Forex, it is necessary to react to what is happening. This is not the same as predicting what is going to do in the market in the future. A good trader simply reacts to what the market is saying. The trader should analyze the graphs, news, and all information that is available to react as quickly as possible against market movements. A good trader is always looking to learn and develop systems and looking for the latest Forex courses to succeed.
4) “The more complicated is my strategy is better”
This is another myth that has nothing to do with Forex Trading. The truth is that, generally, the more complicated strategies or systems are the worst. So, no need to use “lots” of indicators at the same time. We must study the market systems or strategies to find our favorite and stick to it. I know good trading strategies based on just one indicator.