Foreign exchange or currency market is considered as the world’s biggest and most substantial market in terms of currency trading, accounting an exchanged value of about 1.9 trillion dollars a day. This market is where the currency of one nation is being sold and purchased. This was, at some time, done by huge associations like brokerage firms, banks, etc. However, due to the rapid development of the market, various traders and private investors have begun to partake this trade.
Various speculations have been formed on the world of forex trading which have brought misconceptions to the traders. Recognizing the truth in opposition to the fallacies can inhibit frustrations that might affect traders mentally. Let’s distinguish the fact from what’s not.
You can get rich fast.
Misconception such as this is often been brought by the advertisements promising traders can get rich in no time without any hassle and without any risk. Nothing is almost as inaccurate as this statement. Forex trading entails risk and requires laborious work and effort opposed to what the advertisements have claimed.
In truth, there is a thin line between gambling and foreign trading. Forex gamblers would not bother to indulge in acquiring further education, developing strategies and forming a plan. This eventually would lead to failure in the future. Traders however, would evidently focus on attaining education that would prove valuable to their profession; Econometrics and Macroeconomics are just few of them. An embrace to your distinctive psychological profile, or the way you develop your strategies and your own approach, is also worth a good value in the world of foreign trading.
You need to have an ege to be successful.
Attitude holds a vital role in foreign trading. This, by far, holds true. Competition is present in the market. Therefore the key for success lies within the traders themselves. Traders need to possess an edge or factor in order to prosper in this field. Having an edge can become the reason of one’s survival in trading.
Foreign exchange is entirely random.
There is no definite indication that would support this hypothesis. Granting that foreign exchange would show brief fluctuations on the market, it does not denote that the market is being random. Currency market does movements that are long term. There may be times that a probability can’t be determined, however it can be anticipated and controlled nationally, regionally, and globally in terms of economics.
Foreign trading is not easy.
With a percentage of about 5% success rates, trading is indeed not easy. There are various people out there who may in fact have abilities and talent in this field; however, one should acquire education and knowledge on strategies to be a part of the 5% survivors. At the beginning, it may seem easy to sell and purchase currencies in the internet, but gaining profits in the end would be different. That’s why some people seek the help of spread betting providers, like CMC markets, to increase their chance of success.
Foreign exchange is a scam.
This is definitely not true. As stated, foreign exchange is by far a wide ranging market in the world. This is just to say that a lot of people have indulged to partake in this business. Some of these traders may be corrupt and deceitful, exhausting money from beginner traders. However, the blame should not be directed towards the market.