Busting the Forex myths


Forex myths have been plaguing the markets for a long time. Many rumors and misconceptions have derided people and prevented them from making money, especially with Social Trading. These myths have often been propagated due to lack of proper knowledge, fear, or simple laziness to know the truth. Whatever the case may be, there is always something to lose when fallacies are believed.

We at Tradeo are happy to provide the public with clear and concise information about the Forex Market so that investors can take better decisions themselves. Before accepting any opinion, it’s also important to verify its contents and check for other verified sources whether something is true or not.

Below are the top 7 Forex myths that people believe in:

1. Forex is riskier than other markets

This is one of the most famous Forex myths that scare many potential traders away. To refute: in any investment a person makes, risk can always be calculated, mitigated and contained. One of the heaviest factors which determine how much risk will be incurred in any given position is leverage. Investors can often chose to operate with a leverage of 1:100 in order to operate an equivalent amount of $100.000 by investing only $1.000. This means that if the price of the paper rises only by $1, the capital is doubled. Conversely, if it falls by $1, the position is liquidated and the investor loses his money. Yet, nobody is obligated to operate like that and can set appropriate stop losses to contain risk.


Forex myths2. There are programs that can “beat the system”

Sadly, nowadays, many scammers and swindlers promise they found a way to beat the system through some “new algorithm” or “innovative program”. This is not only one of the Forex myths, but a lie perpetrated around all the Financial Markets. Scammers often lead many new traders to invest their money in these fake promises, that ultimately make them lose even more money in the markets. The fact is that not a single person or robot in the world can predict with 100% accuracy future events. In fact, the capacity of these softwares (even if they are legit), is much more limited than that of humans. Don’t waste your time (and money) with these unscrupulous individuals, but rather learn Forex well and you’ll be better off.

3. One can easily get rich

Among the Forex myths, this is one that actually attracts people to invest, but make them lose control of themselves. Because of the Forex boom in recent years, many people were led into believing that you can get rich just by investing in the market. Like every trade, there’s risk involved, which means that one can either win or lose. Except for people to win the lottery or inherit big sums of money, being rich is 99.99% of the times a byproduct of hard work and persistence. Nevertheless, thanks to Tradeo’s Social Trading platform, traders can copy market leaders to increase their chances of scoring high.

4. You can beat the market or win all the time if you study hard enough

Again, another fallacy. Every single trader, even the elite ones, loses often. The difference is that these traders control their losses and keep trading. They know that, even though they can’t win all the time, their gains offset their losses in the long run. Practice makes perfect, and the important thing is to never give up.

5. All companies are scammers and profit when you lose money

Because of recent news about Binary Option and Forex companies scandals who have been guilty of stealing, the decent companies in the market have been penalized with a bad name. The truth is both markets are starkly different and have different goals. Binary options are by definition not an asset and, usually, the company earns money when investors lose. However, in Forex, investors have a tangible product in their hands and most firms charge a small fee each trade per spread. Nevertheless it’s always important to have a list of trustworthy brokers both for Binary Options, as well as for Forex. Tradeo is proud of being among the most trusted Forex brokers in its market, being attested by many reviewers and market regulators.

6. Forex is a lot more difficult to learn than other markets

Every art is difficult to master, and Forex is no different. A person doesn’t need to study years before engaging in the Forex market. All it takes is knowing the basic principles and strategies, and being well informed in order to start trading. As a person acquires experience, his analysis deepens and becomes more sophisticated, and as a results, he’s able to earn more.

7. One needs years and years of losing before winning

Many people think that just because they lose in the beginning, they are hopeless, and it will take a lot of years for one to learn to trade properly. This often depends more on a trader’s capacity than on the inherent difficulty of understanding the Forex market. The difference between those than succeed and those that fail is precisely the effort they put in it. Keep persisting and you’ll succeed.

There are many more Forex myths running around. Tradeo is happy to help aspiring traders to know the truth about the market in order to foster a safer trading. If you have any questions, call one of our representatives and they will be able to explain more about how the Forex Market works.

In the spirit of promoting better trading, Tradeo made this very nice infographic to bust some of these myths.

Forex

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2 Comments

  • Michel
    August 1, 2016 at 8:54 pm

    The information you provide is very important to know for forex trader.
    sometimes we are over expected about forex trading and jumped in the forex market without knowing anything. The chart you show is really amazing reality of forex market. Waiting for next updates

    • Michel Apsan
      August 21, 2016 at 7:15 am

      Thanks Michel, we agree as well 🙂

      People’s minds are often confused with what’s real and what’s fantasy.

      Stay tuned, we will be coming up with more articles!

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