Being the largest financial market in the world, Forex is able to draw in millions of new investors every year. Unfortunately, most of these investors will ultimately lose their money and help to fund the small percentage of investors making a living in the Foreign Exchange Market.
A big part of the reason that so many people lose their investment within the marketplace is because they buy into the many myths floating around about how Forex works in principle.
It is extremely easy to get caught up in the myth and legend of Forex and to ignore the reality. After all, people from the outside looking in see that trillions of dollars are trading hands daily. They see that some people are able to invest only a few hundred dollars and earn a living. They see so many automated programs on the market that the entire system just screams success to the everyday Joe just trying to supplement his income. But the truth is that the Foreign Exchange Market is tricky and brutal and will eat unskilled investors alive.
Debunking Popular Forex Myths
Anyone can do it
It is true that everyone can invest in Forex, but it is not true that everyone is going to have an easy go at it and make a profit. In fact, only a few people out of every hundred investors will ultimately make a profit, and that’s because it takes hard work, discipline, a lot of study and knowhow, and a willingness to put your money on the line to trade. Everyone has the potential to become a solid Forex investor, but it’s not something that just anyone can do. It takes a lot of study, effort, and practice.
The “Working” System
Some insist that there are ironclad systems out there that will work without fail, and millions of people buy into the hype and believe the myth. The Forex market is forever changing from day to day. On Monday, one currency pair may be trading very well for you using the principles of one system, but on Tuesday you could go broke before lunchtime if you stick by your guns and do not learn to evolve your strategy. Systems do work in Forex, but there is no one working system for the market at large.
Playing the Field
Others will tell you that you need to trade multiple currency pairs in order to make the most out of your investment. But successful traders find that sticking with one currency they intimately know works rather well. Once you learn how a currency acts and reacts to other currencies and market fluctuations, there is no need to expand your trading and venture into unknown territory.