Forex myths that you definitely shouldn’t believe
Forex or currency trading has gained much popularity around the world in recent years. The trading volume has gone up from 5 Trillion to more than 6 trillion each day. 95% of the currency trading is done by the big financial institutions. They know how to use their own financial systems to make cash work. The retail traders count today for 5% of the market. During the past years you see a substantial growth of retail traders in Asia and Europe. With this growth of new retail traders, we also see a spread of many trading myths, which can cost many newcomers a lot of money.
Let me outline the most common ones !
There are quite a few myths about forex, some of which may contradict each other. Today, we will briefly describe the ones we see most frequently.
1. Forex or Currency Trading is a Casino or Scam
‘Money experts’ in newspapers say currency trading is a casino. As a result, many people indeed perceive forex as gambling, and it’s true that some uneducated newbie traders behave as such. In reality, however, a trader has a much better chance of success because he or she has it largely in their own hands whether you trade forex, options or stocks. You can’t make a long-term profit in the casino, that’s a mathematical given. On the other hand, traders can make a long-term profit with discipline, the right tools, the correct mindset and mistake based learning. But it takes time.
You also read in newspapers that the big institutions manipulate forex, retail has no chance to make a profit.
We’re sure you’ve heard of “stop-loss hunting” because the big players know where retail traders have their pending orders set. A few losing trades where the market blew you out exactly at your SL and immediately turned back will have confirmed this assumption for you.
In reality, however, it could easily have been a badly set SL. Forex is such a big market that manipulating the price is virtually impossible. So while the big players are aware of pending orders, retail traders should instead adjust their SL and PT to the price action and learn how to apply correct risk management. A skill that schools don’t teach.
2. Trading forex is Easy
The most common claim you’ll hear from someone who wants to sell you their trading system or mentorship for big money. If you think my 5% Club is big money, you better stop reading this article and check what a transformation coach or driving instructor will charge you. Maybe you need an anti-complaining workshop first…lol.
In theory, this opening statement might seemingly make sense because downloading and installing the app, and then opening a trade really is simple, no doubt about that. Even with the A.I Trading Assistant NINI, I made it as simple as possible. But does that guarantee you any profits ? No, it doesn’t. A good strategy is a basis for success, but there is no holy grail that only generates profitable trades. Without mental toughness and discipline, any strategy can lead to losing money.
Real trading takes much, much more than simply applying a trading system. Spending hours of practice, learning correct risk management, dealing with the psychology – all of that and even more is necessary to go through if you’re serious with trading. I personally traded 1,5 years in demo accounts before becoming consistently profitable. The NINI trading system was born out of the necessity to save myself and my team time to find the trend trading opportunities.
In fact a successful trader doesn’t need to have an economics degree and a high IQ. You need in the first place an open growth mindset and you will need to study at least the basics of financial markets, learn about basics of technical analysis, etc. You won’t be a successful trader without putting in some time and effort.
3. Trading Forex is stressful because you will lose money
The most common claim is that you will be stressed as you trade with a portion of your savings that you ‘decided’ to afford to lose. But do you need to stress out or trade with your own money or hard savings ?
Do I risk losing a lot of capital ? You don’t need a lot of money to trade currencies. You don’t even need to risk your own capital. For 100 pounds, you can get trading working capital up to 10.000$ from legit prop trading companies in different countries around the globe. Some of these companies also have Deloitte accreditation. The business model is the same as leasing car companies. If you show them that you can trade in a disciplined manner, they will allow you to trade with a much larger account than you could afford. New stress could arrive from trading with large capital that your mindset is not used to cope with. But once you reprogram your mindset, I can assure it’s worth the effort.
4. Trading Forex gives you Fast Earnings and is a Quick Rich (Ponzi) Scheme
Another myth that someone will try to use in order to sell you something. There are many fake investment schemes using the words forex and crypto. They will guarantee you 5 – 10 or more % profit per day or week. They might show you withdrawal statements and how they made lots of money relatively quickly from the start. Don’t get fooled by these fake investment schemes.
Again, you will not be successful in the long run without the practice time to trade and study. Currencies trading is a long-distance run, not a sprint. No one is born a successful trader.
Forex trading will NOT provide you with a regular income and independence from the start. This is the wish of most traders, but only a small number of them manage to actually make a living by trading. However, even the most successful ones can end up losing money for several weeks in a row. Especially for beginners, forex should be a supplementary source of (often unstable) income, and the regular salary should remain the basis of their monthly income. Then there’s the psychological effect as well. Many traders do well in forex as long as they have a regular second income. But once you quit your regular job, then you are literally forced to be profitable in order to survive, which many traders can not cope with. That’s why it’s prudent to learn, practice and change your skills in a demo account first and then scale up your working capital as you upgrade your mindset and skills.
In our 5% Club program, every newbie is obliged to trade with demo accounts first with specific SMART objectives to learn the right skills and mindset. Many Youtubers let you believe the more trades, the better, and the more leverage, more profits. In reality less is more. While diversifying among multiple instruments can be beneficial for more experienced traders, tracking too many instruments is somewhat counterproductive. Instead, it’s better to focus on one or a few instruments and master your strategy to perfection.
Many beginners feel that the more trades they make, the more likely they are to succeed. However, the opposite is true. Successful millionaire traders enter the market only after mature consideration, following their strategy and choosing only the best setups. And there may not be many of them. That’s exactly how trend trading with NINI works.
5. A good borrowed strategy (from a successful trader) means guaranteed success
Again, this is more of a marketing ploy by those selling their products than the truth. That’s why I don’t want to charge you anything for the NINI trading system. Even if I publish the trading rules on a billboard, some people will still not be successful in applying them. How many people face speeding tickets years after passing their driving exam ? Are you one of them ?
The most successful traders are those who have no emotions and no big ego. Too much emotion does not belong in trading, and a poorly set psyche can do much damage. But overconfidence can also have a harmful effect in the long run. A successful trader can learn from his mistakes, but first, he has to realize these mistakes. That’s exactly what we do in the 5% Club. It’s called mistake based learning. That’s why selling courses doesn’t work. I see many course sellers out there whether it’s index investing, how to get started with investing or trading stocks, options or currencies. If you don’t practice what they teach, 80% is lost within the week.
The most successful traders are also sometimes wrong. Even the NINI trading system has losing trades. No one, not even the most successful investor or trader, is always right and achieves 100% success. The best ones, however, can minimize their losses and make the most of profitable trades.
Conclusion
Personally, I consider learning to trade currencies like learning any other skill. It’s part of my portfolio of cash generation skills. Trading is not investing. Investing is about wealth preservation or growth skills. There’s a lot of bashing of index investors, long term investors about forex trading and I never understand that. It’s like football analysts bashing on golf players. The same bashing happens with fundamental analysis of some value/growth investors against technical analysis. I never understood that either… If you only want to buy index funds in your life, that’s perfectly fine. If you only want to review DCF and Return on Assets or other financial ratios in your investment decisions, that’s fine. If you don’t know how to apply certain skills or want to limit your own beliefs, fine but don’t impose your beliefs on others. Your limitations do not apply to others ! I personally do it all. I always had the attitude to grow my personal finance skills. I invest in index funds, holdings and dividend stocks, ETFs and REITS and master cash generation skills like currencies, indices or commodities trading to generate extra cash flow for my investments.
I consider currencies, indices or commodities trading the same as knowing how to drive a car or how to play golf. I see the opportunities it offers me today and for the future. I understand how the currency markets are interconnected with the stock or options markets and how it’s used by financial institutions. They hide how they make profits by letting cash work. Once you can understand all the above, you will understand the opportunity. The only problem is your limiting beliefs.Mostly imposed by others See quote below. If you read an article somewhere about forex in Belgium, check first the author and if he’s really active in that industry. In most cases, he’s working or lobbying for a retail bank or a financial journalist with a preset mind from the traditional education system. You will find the most currency trading experts in the UK, Singapore, Australia, Japan and some other countries. There are many ‘experts’ out there with an opinion about something they have never done in their life. Be prudent.
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