Forex trading can seem glamorous, as it is often promoted with images of a luxurious lifestyle that’s fit for the rich and famous. That isn’t to say that you can’t get there someday, but trading is also surrounded by a lot of myths and misconceptions Today, we will explore some of these uncomfortable truths so that traders can start trading with realistic expectations.
Reality Check #1: You Have to Invest Money to Make Money
One of the advantages of trading is that you can start out with a small deposit – some brokers will allow you to deposit as little as $10 (or less!). This can be exciting for beginners because it makes it possible for everyone to start trading without requiring you to be rich in advance. However, traders need to realize that the amount they invest does matter. For example, if you want to make a living trading, one study suggests you’d need to deposit at least $30,000 to make around $3K a month. Most of us don’t have that amount laying around, meaning that we would need to trade for some time to make enough money to bring in a large enough profit to support ourselves.
On the bright side, you can make money off your initial investment, even if you do start as small as possible. We’ve heard stories where great traders have made themselves rich off a few hundred dollars, so don’t let this fact discourage you. Simply remember that it is important to start with realistic monetary goals without expecting to become rich instantly.
Reality Check #2: Trade During the Action
We often promote the fact that you can find a trading strategy that supports your lifestyle, whether that’s part-time trading, trading during the morning, in the afternoons, or whenever you have free time. However, the best time to trade is actually when the market is experiencing the most action, which is typical during the New York and London sessions. If you can, you should try to trade during these times because there is more opportunity, even if it means rearranging your schedule. This isn’t absolutely required, but it can help to improve your results.
Reality Check #3: There is No Magic Answer
As a forex trader, you will come across claims that something is the magic answer to becoming rich at some point. These claims could be referring to an indicator, trading strategy, forex robot, or something else. Don’t fall for this – especially when the product that is being advertised costs money. You have to remember that the market is unpredictable and nobody knows what will really happen, no matter how smart they claim to be or how convincing they are when explaining that their system is “foolproof”. This doesn’t mean that these systems can’t be profitable, but you should always be skeptical and never put all your faith into something that claims to make you rich. Instead, focus on perfecting your plan while taking proper risk-management precautions as this is the real key to success.
Reality #4: You Can’t Always Win
Losing trades are an unavoidable part of forex trading. The truth is that if you begin with the idea that you’ll never lose a single trade, you’re living in a fairy tale. The good news is that this doesn’t mean you’re out of luck because it’s possible to be profitable with low win rates, as long as you make enough money on the trades that you do win. You also might wind up with a high win percentage and only take a losing trade every now and then. For most people, this is perfectly acceptable, but some traders do struggle with these losses and blame themselves way too much when things don’t go according to plan. This is why it’s important to understand that this will happen from time to time so that it doesn’t take you by surprise.
Reality #5: Trading Isn’t for Everyone
It’s pretty easy to set up a trading account, deposit a few dollars, and get started trading. Unfortunately, trading is not for everyone. That doesn’t mean that everyone couldn’t make money doing it, but some people just don’t want to put in the time, effort, and patience that it takes to stick with trading. Those that easily give up are more likely to walk away if their expectations aren’t met or after one or two bad trades. If you want to be among those that do make it as successful traders in the long-run, you have to be willing to work hard and understand that trading isn’t a scam, but that it isn’t always easy.