Forex trading is shrouded in myths and misconceptions – some draw in traders, while others scare potential traders away for good. Unfortunately, it’s common for some traders to start out with unrealistic ideas of what trading really is, which causes them to give up once they realize that things aren’t the way they pictured. Keep reading so that you won’t be fooled by the following 3 misconceptions that surround forex trading.
Misconception #1: You Can Make an Easy Living from Trading
You can in fact make a living from trading, but it isn’t nearly as easy as you might think. In fact, some people have actually quit their jobs because of this misconception, only to learn quickly that this idea is not entirely true. First, it would take a substantial investment in order to make enough money to support yourself from trading alone. The exact amount differs, but some studies suggest that it takes around $30,000 to wind up with $3K worth of profits each month. This might be equal to or more than your current salary, but many of us just don’t have that kind of cash available to invest.
You also have to consider that these studies expect the trader to really know what they’re doing, meaning that beginners aren’t likely to make as much money as an expert trader. In the end, it is possible to make a living from trading, but you’re going to need a sizable investment and experience to do so. It can take a few years (or more) to get there but do know that you can still earn profits from trading in the meantime.
Misconception #2: The More Trades You Take, the Faster you Learn
Some newbies want to learn as fast as possible, so they assume that taking more trades will speed up the learning process. While more trading does lead to more experience, this mindset often leads to overtrading, which can cause you to lose money. Instead of trading too much, it’s better to try to improve the quality of the trades you do take. This can provide better immediate results and will improve your profits in the long run. Sticking to your trading plan, perfecting your strategy, and keeping track of results in a trading journal are the most helpful ways to improve your results as you gain experience.
Misconception #3: The Only Goal is Making Money
Everyone that trades wants to make a profit, otherwise, what’s the point? The truth is that making money is a common goal, but you’ll need to set realistic goals for yourself that extend beyond simply making money if you want to be a successful trader. The best goals focus on things that improve you as a trader and lead to better results in the long run, thus leaving you with more money in your pockets. Examples include sticking to your trading plan, tracking results in your trading journal, spending a certain amount of time each day researching, and so on.
You also want to stay away from goals that require you to make a specific amount of money in a certain amount of time, as the market is unpredictable and it is difficult to set realistic goals that go down to the dollar. If you focus on improving yourself and the trades you take, the end result will be more profits in your account.