Whether you are an experienced trader or a newbie who is just beginning to contact the foreign exchange market, various rumors about foreign exchange trading have been surrounding you. These rumors may affect everyone, no matter how long they trade. If a trader can distinguish the main rumors, how to distinguish forex6. cc rumors, investors can avoid unnecessary interference in transactions.
Today, let’s take a look at 10 rumors about foreign exchange trading, which are frequently mentioned by traders. From why to trade forex to how to develop a trading strategy, they may have an impact on every trading stage.
Rumor 1: get rich quick
There are more and more advertising and marketing in the retail foreign exchange market, attracting many people who want to get rich quickly or want to get something for free in the foreign exchange market. Unfortunately, there are really few people who can make quick profits. Trading requires patience, this is a journey without end. Traders may decide to stay away from trading because they have no profit; or they may continue to trade with a certain interval. The transaction needs to be long-lasting, and you cannot try your luck as many times as you gamble.
Rumor 2: Forex is only suitable for short-term traders
High leverage makes short-term foreign exchange trading very popular, but it is not the only option. Long-term foreign exchange trends are more affected by fundamental factors, and these long-term trends are also highly tradable. Long-term traders will pay attention to the market for a longer period of time instead of deliberately paying attention to daily fluctuations. Some people think that long-term trading also has many advantages, such as its spread or commission will be smaller, and it can effectively avoid short-term impulse trading.
Rumor 3: the market is manipulated
Losing traders usually attribute their failures to market manipulation or broker problems. But as we all know, foreign exchange is not a scam. The foreign exchange market is by far the largest financial market, handling countless transactions and orders every day, with an average daily transaction volume of 5.3 trillion US dollars. This also means that if someone takes illegal measures to process transactions, they will always show defects and be discovered by many parties, which is also a characteristic of all markets.
Rumor 4: You made the right decision every time
When losses occur, if you only look for strategies that can ensure that every trading decision is correct, you will never really learn to trade, otherwise your perfect new system will not be able to adapt to the ever-changing market and will be eliminated again. Accept the established failure, find a strategy that can give you a huge advantage in the market, and continue trading until you make a profit.
Rumor 5: news trading can easily bring profit
Many people always believe that traders have the opportunity to make quick profits after major news such as the NFP report is released. However, this is not true and the actual transaction news is very complicated. The price chart usually does not reflect anything, that is, in the first few seconds after the news is released, there is usually no liquidity, which means that traders cannot initially enter or exit the transaction independently. Although it is feasible to establish an order before the press release, it is necessary to analyze the existing data to determine whether the market is beneficial to you. This analysis must be done immediately after the news is released, because there are many other traders working on the same index. Therefore, news trading requires very strict strategies, but it is difficult to make money easily all the time.
Rumor 6: The more transactions, the better the currency pair
Some people think that if you can profit from one transaction every day, then you can profit 10 times by trading 10 times a day. Imagination is always beautiful, but reality is completely different. For most traders, reducing trading volume and focusing on a few currency pairs they know is the most beneficial, unless they are experienced traders and mainly adopt scalping trading strategies. Most traders should be patient, focus on trading products they know, and then wait for the best time to come.
Rumor 7: predicting the market is a profitable process
Trying to predict the market will make it easier for traders to lose money, but many new traders do. Prediction will confuse us because it will lead to our internal prejudice against existing positions and hinder our rational judgment. Traders must be flexible and follow the system for trading. Profit and loss always affect each other. The market is always changing, so traders should adjust with the market. If a forecast is made, traders tend to wait for the market to fluctuate, just to verify that their forecast is correct.
Rumor 8: the more complex the trading strategy, the better
Traders use simple strategies at first and then make small profits. So they assume that if the system keeps adjusting, taking into account more market variables each time, profits will increase. However, this is not the case. Many traders always tend to observe the reversal point and then do more trades instead of looking at simple indicators such as price fluctuations and market changes. Even the best traders can only make more profits than losses. Therefore, if a system can make you profitable, stick to it and don’t change it at will.
Rumor 9: Fund management means setting stop losses
If the trader already has the trading skills to obtain long-term profits, then money management is the most important factor in determining success. Fund management is not simply setting a transaction stop loss, it includes determining how much money to invest in each transaction, usually not more than 1%. It also determines how many positions need to be opened at a time, and if multiple positions are opened, whether these positions need to be hedged or are highly correlated. Through fund management, traders can improve their trading level. If you ignore money management, even if you have the best strategy, traders are doomed to fail.
Rumor 10: Just simply follow other traders
How to make a deal? There are always many people who give you countless suggestions, such as what to trade, when to trade and so on. However, the funds are the trader’s own, and the result of the transaction can only be borne by the trader, whether it is profit or loss. Therefore, traders should try their best to learn and develop their trading skills, and then form a system that is most suitable for them, rather than relying solely on the advice of others. Experienced professional traders can indeed help new traders, but their suggestions should be filtered and reviewed. No one is very interested in whether someone else’s account is profitable, so only after mastering the trading skills can they truly help themselves.
It is very important for traders to do sufficient research and understand the situation in foreign exchange transactions. This knowledge may come from past experience, or it may come from self-study and education. The foreign exchange market is full of rumors, which may hinder the success of traders. Establish a mature and complete trading plan, and then assume all the results of this plan, regardless of profit or loss. Only in this way can we stay away from the negative impact of rumors.