Forex trading online has become more and more popular in recent
years, due in large part to the popularity of stock trading on the
internet. But along with this popularity comes the inevitable hype,
myths, and at times, complete untruths. While many of these myths are
relatively harmless - they do cast doubts on the Forex industry, and
some can actually be costly to beginning currency traders as well. Here
is the list of the most common Forex myths:
· Forex trading is easy.
First the truth. It is easy to start Forex trading and it is easy to
buy and sell currencies online. But succeeding and making money is
anything but easy. It takes education, time and practice. Of course,
there are talented traders that learn very fast, but generally speaking,
starting traders should dedicate part of their time to educating
themselves, practicing and developing strategies.
· Forex is gambling.
This is a myth and is often heard about all forms of trading; whether
it's stocks, bonds, futures, options etc. In reality Forex is the
epitome of macro economics in the purest form, even more so than other
types of market trading as it deals solely with the performance,
structure, and behavior of national or regional economies as a whole,
and their interrelationships with each other. If this were true, then
all the national economic administrators, advisors, consultants and
students are the world's best gamblers. Rather we are all students of
economics, technical analysis, fundamental analysis and psychology.
· Forex is a scam.
Forex got some bad press after High Yielding Investment Programs
(HYIP's) started to claim that they earn money on Forex. More recently a
firm in New York was shut down and another's internet trading site
dismantled for bilking investors out of millions. Fortunately prison
terms have been issued for bringing discredit to a legitimate, regulated
and law abiding industry. Actually Forex is a real currency market
where anyone can trade for themselves and be responsible for their own
decisions, so it's hardly a scam. The only scams you should be afraid
of as a Forex trader are scamming brokers and marketers that sell Forex
books, sure-fire strategies, trading systems, guaranteed returns or the
usual "to good to be true" devices.
· Only the rich can trade Forex.
This was true. Now with the fast development of high bandwidth in the
common Internet connection, coupled with the financial backing of the
largest financial institutions in the world, Forex is now open to
everyone. You can start trading with just $1.
· Forex is completely random.
Although the short time fluctuations of the Forex market may seem
spontaneous and random, this is a complete myth. When you order a trade,
there has to be a counter trade to yours. There is nothing random about
it. Long term movements of currency pairs are far from random. There is
a certain range of probability, but it is not random and can be
predicted, controlled and influenced by global, regional and national
economics.
· There is a "Holy Grail" in Forex.
Some prefer to believe that they can find some strategy that will earn
millions and work forever. Unfortunately that belief has no proof.
Successful traders are always changing their strategies and adapting
them to the current market conditions. Usually even a Forex strategy is
something that can't be expressed as a simple set of rules, it must used
with flexibility and adjusting to be really profitable. Yes, a
Philippine housewife opened a $25 Forex trading account and built it to
$2.6 million in three years. She is a phenomenal trader. She studied,
practiced, learned and constantly adjusted and executed her trading
strategy flawlessly.
· Brokers trade against their clients.
In a short, this is both true and false. When you execute a trade there
has to be someone executing the exact counter trade at the same time.
If there isn't your broker counters it to cover your trade until they
can match the trade in the opposite direction with another trader to
minimize their exposure. Remember, Forex brokers make their money from
the difference in the currency pair (the spread), and try to keep their
exposure to the market minimal for the most part.
· Forex trading is risky.
THIS IS NOT A MYTH - THIS IS TRUE. Just as in any form of trading or
investing, there are no guarantees and you could lose all the money you
invested. While practicing sound risk management techniques prevent
this, it could happen. If you open an account with $25, please make sure
it is not $25 you need to feed the baby. Also, while I have never heard
of anyone losing more than they invested (modern internet trading
systems prevent it), technically you could.
Mathew Murray is the current Preident/CEO of M 5 Forex, Inc. M 5
Forex is the industry leader in retail forex trading. What is Retail
Forex Trading? It's foreign currency trading for you and me. To learn
more about trading currencies on the forex market visit us at
[http://m5forex.com/default.htm] to explore all the available assets to
you as a retail forex trader. Sign up for a free Demo Account at
[http://www.m5forex.com/demo_request.htm] or begin with a live trading
account for as little as $25. Trade from anywhere in the world on any
computer or mobile phone. Begin Forex trading in just minutes with
fast, secure deposits by Visa/MC/Diners credit card or use your E-Gold,
E-Bullion, PayPal or bank wire transfer. Complete package with nothing
to buy ever. You can withdrawl any or all your funds at any time back
to your credit card or bank account. Learn more about Forex trading
today.
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