5 Forex Myths Investors Believe In

Posted by sagar on October 4th, 2017

Like any trading market, forex trading comes with its fair share of myths and lies. These not only discourage people from trading in the currency markets but often leads to a lot of losses for investors who believe in these myths.

Here are some of the most common myths that affect the forex market. We aim to bust these so-called myths and paint a clear picture about the forex market.

1. Forex is for short-term trading

Demand and supply influence currency rates. But it is the broad macroeconomic conditions which actually influence demand and supply. One thing to know about these macroeconomic conditions is that they do not change overnight. They take time to impact. Therefore, forex trading makes for an excellent long-term investment option.

2. You need to be active 24 hours.

Since the markets are live 24 hours a day, many investors feel they need to watch the market all time. This is not only a myth but impossible as well. Many investors have regular jobs; they allocate specific times to trade and place them at that time. Those who do trade full-time place their trades within working hours and not 24x7.

3. There is one single strategy to make money

A myth common in many markets. No, there is no single formula which can make you millions with  forex trading. An investor’s success in the forex market depends upon his or her understanding of the market, the factors influencing the market, and a tiny bit of luck.

4. Leverage Matters

There is the feeling amongst many investors that the more margin you have, the more money you will create. Well, you could lose a lot too. A higher margin may make you lose a lot more money than your original investment amount. Therefore, an investor should always trade with minimal margin or better, no margin.

5. The Market is rigged

For every investor who makes money from forex trading, there will be another investor who blames the market for his or her losses. No, the market isn’t rigged to favor to a few. The forex market is too liquid to be rigged. The rates change often and no single investor or group can manipulate it.

These are the five famous myths about forex markets busted. If you know of any more myths, do tell us about them in the comments section below.