Truths and Myths about Forex Trading

Forex trading is a serious money making endeavor  In fact, some forex traders do this full time in the comfort of their own homes.  More importantly, they make more than the amount they would get from a regular nine to five job. But in order to do so, you need to understand 1 very important word – “serious”. This is because there are some so called experts who try to propagate half truths and whole lies about forex.

The goal of this article is to realistically discuss Forex. The goal of the author is not to dissuade future traders, but to actually persuade the same. This is by discussing whole truths, basic realities, and reasonable goals.

Myth Number 1: You Can Start Trading Today Using Our Secret Technique

Okay, you can open an online forex trading account and trade the same day. But chances are you will lose your money and then get turned off by the whole idea of working at home or online trading forex.

Reality Check 1: Online Forex trading allows you to earn REAL money, working flexible hours, at any location, i.e. your home. Those advantages alone make it a worthwhile endeavor  However, you need to do your due diligence and work seriously. This means you learn the trade, slowly get your feet wet, and then gradually build experience. Most experts agree that a 3 to 6 months learning curve should get you enough experience to actually make at least twice the minimum wage.

Myth Number 2: Sky Is the Limit in Terms of Profits

There is always a limit. This limit depends in large part to the dedication you put into your basic education, the risks you can take and the amount of money you invest. It would be more apt to describe the money you can make in Forex as commensurate to your efforts, which is more than you can say about most jobs.

Reality Check 2: Full time Forex traders advice that you set a daily or weekly profit and/or loss threshold. Simply put, whenever you breach that threshold, you stop trading. In case of profits, you at least minimize your risk to say ¼ of your earnings. In case of a loss, you stop trading, step back, analyze what happened, and trade another day.

Myth Number 3: All You Need Is to Read a Book

A lot of so called Forex trading experts, at least those who are selling FIY books will tell you that a few pages of a self help manual will do the trick. Well, it will not! Forex knowledge involves at least two things. The first is the basics which you read in a book. The second is raw data and analysis which has to be streamed to you on a regular basis, preferably real time.

Reality Check 3: Most serious forex traders enrol in an online forex program or platform. This allows them to get raw data, analysis, news of the day, regular newsletters, etc. Simply put, without these updates, your basic education will be a waste, because you have all this forex trading knowledge but you cannot apply them properly.   

Guest post by FXCC – Forex Trading ECN Broker