The biggest myths about forex trading

 The biggest myth about forex trading is that you will get rich overnight while you chill on the beach

When you see the ads from traders that invite you to attend their seminars, they portray a lifestyle that most people can only dream about. And the longer you watch these videos, the more you want to sign up to get a piece of that wonderful and rich pie. 

But before you rush to part with your money, here are a few myths about trading that will help you to make an informed decision about forex trading.

Myth no.1: You can get rich overnight.

This is the biggest lie of them all. 

Say you want to make a thousand dollars in a single trade, how much money do you think you'd need to make that amount? 

Or let's say you're more modest and want to make a hundred dollars with every trade. You have to have more than one hundred dollars in your account because the odds that you will double your money with the first trade are very slim.

But let's say you are optimistic and you really want to make one hundred dollars in your first trade.

Bear in mind that the experts recommend you use one percent or less of your entire account balance. 
You are going to need about one thousand dollars to make one hundred dollars in one trade to protect yourself against risk. 

All experienced traders will tell you that easy does it. They will also tell you to start small, be patient, and be disciplined.

But of course, you will think it's all nonsense, you know what you're doing and you will start trading using a too-high lot size. Before you know it you've lost money before you even started making money. 

You can have consecutive successful trades with your demo account, that is if you are practicing with your demo account, and still lose tons of money when you start trading with your real money.

Forex trading is the opposite of a get-rich-quick scheme. It will make you poorer faster than anything you've experienced in your life. You will experience that sinking feeling when you see your balance being wiped out right in front of your eyes as you're hoping, praying, and wishing that the trend will reverse.

You can go from having thousands in your account to having nothing in minutes. And that is the reality of trading that you won't see in advertisements about trading.

Experienced day traders make between 5% and 10% every month, and they use a strategy, not emotions and excitement. For you to make a hundred dollars per trade you need to have at least one thousand dollars in your account

If you want to get rich from trading, the key is to preserve your money, know your risk, and be disciplined. It sounds very easy when you hear those words from experienced traders, but when you are sitting in front of that screen and watching a trade, all these lessons can fly out the window.

Myth no. 2: Trading is easy

Anyone who tells you that trading is easy is a big fat liar. It's one of the most difficult and analytical things you'll ever do.

 

You must be able to answer some of the following questions:

What are your margins?

What is your leverage?

What is your spread?

What is a pip and how are you going to measure the movements?

What lot size are you going to use?

What currency pairs are you going to use?

What indicators are you going to use?

What time frames are you going to trade in?

Are you going to use a stop-loss or will you physically monitor your trade?

What time of the day are you going to trade?

How much are you prepared to lose before you close a trade?

These are just the basic questions you need to answer if you want to become a trader.

Buying expensive software won't make it any easier or prevent you from losing money. You still need to understand how to read and interpret the indicators, and which ones you need to work out a trading strategy. And that brings me to myth number three.

Myth no.3: You don't need a strategy when you have trading software 

All the people who've lost tons of money using expensive trading software, please raise your hand.

There is no substitute for a human brain when it comes to trading. Even if you have the best software, you still need a strategy.

Your trading strategy will help you to:

Know when to enter a trade
When to exit a trade
Choose the right indicators and time frames 
And most importantly limit your risk

It is impossible to only have winning trades, but with the right strategy, you can limit your losing trades.

The big thing you have to deal with is the emotions that will grip you when you trade. Fear and greed are very real when you trade, and they can rob you of some very good trades.

Fear will let you get out too soon, and greed will let you stay in too long. It's incredibly hard to control your emotions as a trader, and you never get used to that high feeling when you make a profit, or that sinking feeling when you've lost your money.

Then there are the crazy and volatile price movements, especially when there is an announcement. There's a constant fight between the bull and bears in the market and that war is reflected in the wild fluctuations of the price movements you see on your screens. If you are in the lower time frames like the five and fifteen minutes you will lose your cool because the price changes so many times in those minutes that you can't keep up.

These are three of the biggest trading myths I've noticed. And if you believe these promises that you hear you might think forex trading is a walk in the park, only to get burned really badly.

Is forex trading all bad? No, definitely not. It just requires so much more than you're made to believe. 

Create a strategy and work on it, until you've found the one that will give you the golden goose of the forex market. And stick to it. Find a way to control your emotions. Know your risk and get out before all your money is gone. 

I know it's much easier said than done. Forex trading is not easy but it can be done. You just have to be realistic and patient. And never use money that you can not afford to lose. 

There are no guarantees with trading, and no one can promise you a certain return on your investments. The markets are crazy. All you can do is find your calm spot in the mayhem and chaos. And no one can do that better than you, the one whose dream it is to trade.

Disclaimer: I am not a financial advisor or a trader and this post is based on my personal experience. For advice please talk to a professional trader. This doesn't serve as financial advice.