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10 Myths About Forex Trading

10 Myths About Forex Trading

With an average turnover in excess of USD 5.3 trillion per day (according to the preliminary global results from the 2013 Triennial Central Bank Survey of Foreign Exchange and OTC Derivatives Markets Activity), forex (FX) is the largest market in the world in terms of volume of trading.

Like any other trade, forex trading isn’t without its fair share of myths. These myths can potentially affect any trader, seasoned or novice; so knowing and steering clear of these myths can save them unnecessary frustrations.

Below, we look into some of the most common myths about forex trading, which will be helpful for those who are thinking about trying their hand at currency trading.

1. Forex trading is easy

This is the most common of the myths about forex trading. “Read a book or two, set up a brokerage account and you are ready to make daily profits in the forex market.” Well, if you are thinking about jumping into trading forex, it takes a lot more than just reading a book or two.

Understand that trading is anything but easy. If you are dreaming about a quick buck trading the forex market, you’re in for a rude awakening! Some might suggest, “Download and set up an Expert Advisor Software and you’re sure to make big money trading FX.”

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Installing a piece of software may be easy, but being able to use the program effectively to for maximum profit requires a certain level of understanding of the market. The successful traders in forex not only put a lot of effort into what they do, they also have acquired years of experience to be able to place winning trades.

2. You need a degree in economics to trade forex

It is true that foreign exchange requires an understanding of world economics to a certain extent and that having a general idea of economic concepts is helpful in trading forex.  Nevertheless, it is not necessary to have an advanced degree in economics and understand every economic principle to be trading currencies.

Many forex traders come from diverse academic backgrounds. To be a successful trader, what you need is a good head for numbers, an intuition to help you guesstimate where the market is heading and the ability to react quickly to market-moving events.

3. You need to predict what is going to happen in order to make money in forex

Since geopolitics has a big influence on the forex market, the traders who make money are the ones who are quick to react to the things happening around the world, rather than the ones making predictions.

Trading predictions can sometimes be made. This may be possible by analyzing the charts and recognizing certain patterns that have occurred in the past and assuming they might occur again. But for the most part, it is rather the quickness of reaction that makes a trader money instead of novice predictions which may or may not come true. A good trader is always alert, reads and interprets the news and is always willing to learn and evolve.

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4. You need a large sum of money to trade in the forex market

There was once a time when only larger international banks and financial institutions could access and trade in the foreign exchange market. Thanks to the advent of electronic trading, those days have come and gone. Instead of launching a full blown and costly brokerage firm or bank, a small organization can simply launch a forex white label and be able to run a forex trading business very economically.

Furthermore, now that the forex market has become accessible to small traders through forex brokerage accounts, anyone with a reliable internet connection and a relatively small amount of money can trade currencies online. Nowadays, a brokerage account can be opened with as little as $25.

Of course, trading with $25 will probably not bring in as much profits as trading with $25,000. Nevertheless, a novice trader can hone his/her trading skills with smaller amounts first.

 5. You need to watch the market 24 hours a day to be successful

The forex market is open 24 hours a day and requires a lot of commitment from traders who want to succeed. But that doesn’t necessarily mean that you need to watch the market 24 hours a day to make money.

Some traders even have regular jobs. They manage to allocate a little time from their daily schedules to trading, which allows them to execute some trades at the end of the day – and still make a good income doing so. You don’t really need to sit in front of a computer staring at charts all day long.

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Besides, there are automated software packages available in the market that do a lot of the work for you.

6. Being unconventional improves your chances of success

Being conventional or unconventional does not have much to do with a person’s chances of success trading forex as much as one’s understanding of the FX market, its drivers and the factors that influence foreign exchange rates.

Rather than trying to be unconventional, good traders learn and adapt to the changes in the market, which improves their chances of success.

7. The higher the leverage, the better

Trading forex on margin carries a high level of risk. A good trader knows that the higher the leverage, the higher the level of risk because the multiplicative effect of the trades is higher. Trading with relatively smaller amounts of leverage reduces the possibility of losing all your funds, while trading with high leverage could lead to large losses that even exceed your invested capital.

It is true that you can get lucky and have higher leverage work in your favor, but the reality is that you have an equal chance that it can work against you. Why take that chance?

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8. You can get rich quickly in forex

In Forex, there are quite a few short term speculators who jump into the market hoping to get rich quickly with very little effort. Unfortunately, quick prosperity is rare even in the world’s richest market.

Trading takes a fair amount of effort to master, as well as significant patience and consistency. The impulsive gambler mentality seldom works in the realms of foreign exchange.

9. The more complex the strategy, the better

Complex is not always better. Although complicated trading strategies may sometimes bring you big returns quickly, it rarely ever happens. In fact, complex strategies in trading often prove  much more difficult to execute and earn a profit with.

Good traders often stick to simple strategies; strategies that make them money. In forex, even the best trader wins only a few more times than he loses, making a profit from the difference. Consequently, tweaking strategies to make them more complex may be detrimental and only increase the overall risk.

10. The market is rigged

When too many bad trades are made, some traders often complain that the market is rigged or that the brokers are corrupt. While it is true that a country’s currency can be controlled by governments and central banks to a certain extent, forex, as a market, is not a scam.

The truth is that forex is too liquid and volatile to be rigged. Forex rates change often and disciplined traders are there to take advantage of the fluctuations using winning strategies. If you are making too many losing trades, think about the most likely culprit: that you need to spend more time learning to trade rather than the market is rigged.

Featured photo credit: Pixabay via pixabay.com

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Nabin Paudyal

Co-Founder, Siplikan Media Group

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Published on November 8, 2018

How to Answer the Tough Question: What are Your Salary Requirements?

How to Answer the Tough Question: What are Your Salary Requirements?

After a few months of hard work and dozens of phone calls later, you finally land a job opportunity.

But then, you’re asked about your salary requirements and your mind goes blank. So, you offer a lower salary believing this will increase your odds at getting hired.

Unfortunately, this is the wrong approach.

Your salary requirements can make or break your odds at getting hired. But only if you’re not prepared.

Ask for a salary too high with no room for negotiation and your potential employer will not be able to afford you. Aim too low and employers will perceive as you offering low value. The trick is to aim as high as possible while keeping both parties feel happy.

Of course, you can’t command a high price without bringing value.

The good news is that learning how to be a high-value employee is possible. You have to work on the right tasks to grow in the right areas. Here are a few tactics to negotiate your salary requirements with confidence.

1. Hack time to accomplish more than most

Do you want to get paid well for your hard work? Of course you do. I hate to break it to you, but so do most people.

With so much competition, this won’t be an easy task to achieve. That’s why you need to become a pro at time management.

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Do you know how much free time you have? Not the free time during your lunch break or after you’ve finished working at your day job. Rather, the free time when you’re looking at your phone or watching your favorite TV show.

Data from 2017 shows that Americans spend roughly 3 hours watching TV. This is time poorly spent if you’re not happy with your current lifestyle. Instead, focus on working on your goals whenever you have free time.

For example, if your commute to/from work is 1 hour, listen to an educational Podcast. If your lunch break is 30 minutes, read for 10 to 15 minutes. And if you have a busy life with only 30–60 minutes to spare after work, use this time to work on your personal goals.

Create a morning routine that will set you up for success every day. Start waking up 1 to 2 hours earlier to have more time to work on your most important tasks. Use tools like ATracker to break down which activities you’re spending the most time in.

It won’t be easy to analyze your entire day, so set boundaries. For example, if you have 4 hours of free time each day, spend at least 2 of these hours working on important tasks.

2. Set your own boundaries

Having a successful career isn’t always about the money. According to Gallup, about 70% of employees aren’t satisfied with their current jobs.[1]

Earning more money isn’t a bad thing, but choosing a higher salary over the traits that are the most important to you is. For example, if you enjoy spending time with your family, reject job offers requiring a lot of travel.

Here are some important traits to consider:

  • Work and life balance – The last thing you’d want is a job that forces you to work 60+ hours each week. Unless this is the type of environment you’d want. Understand how your potential employer emphasizes work/life balance.
  • Self-development opportunities – Having the option to grow within your company is important. Once you learn how to do your tasks well, you’ll start becoming less engaged. Choose a company that encourages employee growth.
  • Company culture – The stereotypical cubicle job where one feels miserable doesn’t have to be your fate. Not all companies are equal in culture. Take, for example, Google, who invests heavily in keeping their employees happy.[2]

These are some of the most important traits to look for in a company, but there are others. Make it your mission to rank which traits are important to you. This way you’ll stop applying to the wrong companies and stay focused on what matters to you more.

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3. Continuously invest in yourself

Investing in yourself is the best investment you can make. Cliche I know, but true nonetheless.

You’ll grow as a person and gain confidence with the value you’ll be able to bring to others. Investing in yourself doesn’t have to be expensive. For example, you can read books to expand your knowledge in different fields.

Don’t get stuck into the habit of reading without a purpose. Instead, choose books that will help you expand in a field you’re looking to grow. At the same time, don’t limit yourself to reading books in one subject–create a healthy balance.

Podcasts are also a great medium to learn new subjects from experts in different fields. The best part is they’re free and you can consume them on your commute to/from work.

Paid education makes sense if you have little to no debt. If you decide to go back to school, be sure to apply for scholarships and grants to have the least amount of debt. Regardless of which route you take to make it a habit to grow every day.

It won’t be easy, but this will work to your advantage. Most people won’t spend most of their free time investing in themselves. This will allow you to grow faster than most, and stand out from your competition.

4. Document the value you bring

Resumes are a common way companies filter employees through the hiring process. Here’s the big secret: It’s not the only way you can showcase your skills.

To request for a higher salary than most, you have to do what most are unwilling to do. Since you’re already investing in yourself, make it a habit to showcase your skills online.

A great way to do this is to create your own website. Pick your first and last name as your domain name. If this domain is already taken, get creative and choose one that makes sense.

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Here are some ideas:

  • joesmith.com
  • joeasmith.com
  • joesmithprojects.com

Nowadays, building a website is easy. Once you have your website setup, begin producing content. For example, if you a developer you can post the applications you’re building.

During your interviews, you’ll have an online reference to showcase your accomplishments. You can use your accomplishments to justify your salary requirements. Since most people don’t do this, you’ll have a higher chance of employers accepting your offer

5. Hide your salary requirements

Avoid giving you salary requirements early in the interview process.

But if you get asked early, deflect this question in a non-defensive manner. Explain to the employer that you’d like to understand your role better first. They’ll most likely agree with you; but if they don’t, give them a range.

The truth is great employers are more concerned about your skills and the value you bring to the company. They understand that a great employee is an investment, able to earn them more than their salary.

Remember that a job interview isn’t only for the employer, it’s also for you. If the employer is more interested in your salary requirements, this may not be a good sign. Use this question to gauge if the company you’re interviewing is worth working for.

6. Do just enough research

Research average salary compensation in your industry, then wing it.

Use tools like Glassdoor to research the average salary compensation for your industry. Then leverage LinkedIn’s company data that’s provided with its Pro membership. You can view a company’s employee growth and the total number of job openings.

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Use this information to make informed decisions when deciding on your salary requirements. But don’t limit yourself to the average salary range. Companies will usually pay you more for the value you have.

Big companies will often pay more than smaller ones.[3] Whatever your desired salary amount is, always ask for a higher amount. Employers will often reject your initial offer. In fact, offer a salary range that’ll give you and your employer enough room to negotiate.

7. Get compensated by your value

Asking for the salary you deserve is an art. On one end, you have to constantly invest in yourself to offer massive value. But this isn’t enough. You also have to become a great negotiator.

Imagine requesting a high salary and because you bring a lot of value, employers are willing to pay you this. Wouldn’t this be amazing?

Most settle for average because they’re not confident with what they have to offer. Most don’t invest in themselves because they’re not dedicated enough. But not you.

You know you deserve to get paid well, and you’re willing to put in the work. Yet, you won’t sacrifice your most important values over a higher salary.

The bottom line

You’ve got what it takes to succeed in your career. Invest in yourself, learn how to negotiate, and do research. The next time you’re asked about your salary requirements, you won’t fumble.

You’ll showcase your skills with confidence and get the salary you deserve. What’s holding you back now?

Featured photo credit: LinkedIn Sales Navigator via unsplash.com

Reference

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