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Author: Monica Hendrix Article source: http://www.articledeshboard.com/. Used with author's permission.
I have been a trader for over 25 years and the myths below are common ones and if you make anyone you will lose your equity and join the 95% of traders who lose.
Let's look at these forex myths and why they will guarantee you lose.
1. You Can Predict The Market
This is a common myth and the bulk of novice traders think they have to predict where prices are going to succeed - wrong.
In forex trading if you predict you are relying on hope or making an educated guess and the market will kill you.
Never predict!
Always look for price confirmation. If for example you think a level of support will hold, wait for price momentum to turn up above the level and confirm it has held - then trade.
Also don't believe the scientific methods sold on the net they don't work.
If markets were scientific, we would all know the answer in advance and there would be no market!
2. You Can Make Regular Income Day Trading
You can't make money day trading full stop - yet more new forex traders fall for this myth than any other.
All volatility in short time frames is random and support and resistance levels are meaningless, so you can never win
If you don't believe me, ask a forex day trader for a real time track record over the longer term and you won't get one - period.
3. You Can Buy Success
Forget all the vendors trying to sell you methods that will make rich (all for a few hundred dollars!) most of these guys have never traded in their lives and rely on hyped exaggerated copy to sell their systems.
To succeed you need to have confidence and discipline and that comes from within no one else can give you success - it comes from within and your own understanding.
4. You Should Keep Stops Close To Reduce Risk
All you will do is get stopped out by normal volatility and the same goes if you try to trail a stop to close.
To make money you need to take a risk.
Most forex traders want to restrict risk so much they guarantee they will lose.
5. You Should Diversify To Reduce Risk
If you are trading over 100k maybe, but if you are a small trader diversification will simply mean you dilute profit potential - To win you have to bet meaningful amounts.
I see vendors saying you should only risk 2% per trade well on $5,000 that's $100!
If you risk that you won't have much profit potential.
If you have confidence in your forex trading strategy risk 25% or more and have the courage of your conviction.
6. You can Listen and Act On The News
There is a lot of news you can get and it won't help you.
It's better today than it ever was, but the ratio of winners to losers remains the same.
If you try and trade off news stories, you're chasing the market.
News is discounted in a split second and is discounted instantly by forex markets which are then looking to the future.
The arguments are convincing in telling you why things happen but not what is going to happen - ignore them.
7. More Indicators = More Profits
After all 10 indicators are better than 2 or 3 - Dead wrong.
The best forex trading systems are simple and robust, whereas a complicated trading system has more elements to break and will fail.
Keep in mind all the best forex trading systems are simple, NOT Complicated.
8. If you Work Hard Your Chances of Success Increase
You get rewarded for being right about market direction - nothing else.
If you spend 10 hours a day or ten minutes, it doesn't matter so long as your trading signals are accurate.
9. Trading To Much
Many traders simply think if their not trading their missing something but the opposite is true - they end up trying to force trades or take trades with bad odds and get wiped out.
Only execute trading signals when the conditions are right and be patient.
10. Not Learning the RIGHT knowledge
This is really a combination of the above points.
Successful forex trading means:
Working smart rather than hard and learning just the right information and discounting everything else.
Contrary to popular belief, all the information you need is available free on the internet and if you study it, build your own system you have can have confidence in you can achieve currency trading success.
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