4 Common Misconceptions of Forex Trading

Posted on 10th July 2018
4 Common Misconceptions of Forex Trading

Misconceptions might not do any harm to an average person but for a trader, it can eat up their entire savings. A large number of novice traders have lost a fortune failing to understand the basics of trading. Here are the four common forex misconceptions you need to be aware of.


People see major changes in the stock prices after an announcement or an impactful event on the news and drool for quick profits. The truth is that the liquidity for the first few seconds after the announcement is almost zero, which means you cannot get into or get out of a trade in a favourable position.

In-depth analysis of the situation with a complete understanding of the behaviour of the market might assist you to enter a favourable position before the announcement is made.

Not to forget the traders who are provided with the same indicators will also be competing for the trade. And you need to calculate, figure out and formulate the strategy the next minute, which can prove to be enigmatic.


It is also common to assume that higher the number of pairs you trade, the more profits you can accumulate. But it is quite taxing just to keep track of all the pairs, not to mention the split-second decisions and calculations you will have to perform.

The majority of traders limit themselves to a few pairs which they can understand and focus on. This way they can circle-out the best opportunities and make the most of it.


To create a strategy, you must have a tight grip on the trends and behaviour of the market at various times. You should be able to calculate your entries & exits and should have the control to act logically rather based on emotions. But relying on one strategy to exit every trade with a profit will not only leave you disappointed, it can also burden your life financially.

There is no strategy to make every trade a winning one. At times your strategy might put you at risk, but that also doesn’t mean that your strategy is incompetent. Have a number of strategies. Use it only when you have found the right opportunity.


In the end, it all comes down to predicting the market with the help of the collected data. Most of the novice forex traders won’t last the learning curve as they lose mind with every loss.

Don’t just enter the market with your prediction. Check whether the market is moving in the direction of your prediction before entering a trade to save yourselves from heart wrenching losses.

Avoiding these misconceptions at the early stage is crucial, but once you have become a pro, you could try as what did not work for many might eventually work for you, and in trading, there is no saying what will happen next. So keep your heads sharp to absorb all the fragments of knowledge thrown at you.

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