Forex Trading - 10 Accepted Forex Wisdoms That Are Wrong and Cause Losses

By Kelly Price

If you want to win you need to forget about the commonly accepted wisdoms about Forex Trading told to you online. Most people follow them and remember - most traders lose...

1. Forex Trading is Easy

Vendors continually tell you this and tell you that they can lead you to success with little or no effort; alas it's not true, as we said 95% of traders lose! Winning, depends on having a sound forex education and knowing what you're doing. You're in charge and if you accept this, you can win.

2. Forex Robots Work

A Small minority do - but not the vast amount of forex robots sold for $100 or so.

Why?

Because they have never been traded!

The track records look good but that's simply because they are a back test, on historical data, knowing the closing prices, well if you the exact prices its not hard to make a profit. If you want to lose, the majority of forex trading robots are great way to do it.

3. Day Trading restricts risk and Increases Rewards

This is a dumb way to trade, it's pretty obvious that all daily volatility is random and you have no chance of winning long term. Sure, vendors claim profits but like the robots earlier it's all simulated profits on paper not real cold hard cash you can spend at the store.

4. Complex Mathematical Algorithms Can Predict

This always makes me laugh - forex trading is a market of probabilities not certainties, so what is the use of complex mathematics?

If I ever see a system based on complex maths, by some nerd I'm off to the next one. The best way to make forex profits is with a simple, robust trading system which has fewer elements to break than a complicated one.

5. Risk 2% Only per Trade

This is ok on 100k account - but let's see on a small trader account that equates to $20.00 - well short term volatility will have that. Risk 10 - 20% and remember - this is not being rash, it's simply risking enough to make enough and if you take calculated risks, when the odds are in your favour you can win.

6. Always Diversify

Again ok for a big account - but on a small account diversification simply means you dilute the potential profit of a great odds trade, with a marginal trade.

Forget diversification.

7. You Need to be on top of Market prices all Day

I have seen people who think this helps them win - it doesn't.

You should check prices maybe once or twice a day and that's all you need. This myth is put about by day traders, who lose chase prices around in random volatility and lose. Don't join them and get caught up in the noise.

8 You Need to Constantly Educate Yourself

The more you learn the better a trader you will be - rubbish!

Forex trading has got nothing to do with this. You don't get your reward for your effort, you get rewarded for making money with your trading signal and that's it.

I have never changed my forex trading system in 20 years, it works, has losses but the profits are bigger. Sure its not perfect but no system is.

Saw someone giving forex advice that you should write down and learn from your losses really?

What use is that you lost! All trading systems have losses, if your system is soundly based profits come as well - there is nothing to learn.

9. Use a Demo Account

To see if you can win in real life use a demo account. Fact is most traders who win in demo accounts, don't win in the market - why? Because there is absence of pressure and forex trading is a pressure environment, money is on the line.

It can help you get familiar with the trading platform but that's it.

10. The More Leverage you Use the Better

Most people think that brokers give 200 or 400:1 leverage out of the goodness of their hearts. In reality, most are market makes i.e. they win when you lose and they know investors will over leverage and blow their accounts up. 10 - 20:1 is plenty of leverage on most accounts.

Final Words

So there you have 10 commonly accepted wisdoms, that most traders believe and there all wrong. If you want to win understand the majority lose and believe one or all of the above so called wisdoms - don't make the same mistake.

Get a sound forex education and focus on doing what the majority don't do and you can win.

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