For a while, now “FOREX” has seemed to be a trending thing now among young people like me. I must say it’s not a bad thing at all, but the spirit behind it is what borders me.
People see course promoters, and brokers everywhere promoting that trading is a quick and easy way to become the next Forbes richest person, which is very wrong. In all sincerity, they do not have your best interest at heart; forget about some of the so-called “proofs” they show you.
Trading is a very serious business, and yes, it sure can be very lucrative. However, people see it as something they can just jump into without proper guidance. They come in with a lot of really crazy expectations.
How can a person invest $100 and expect to earn $100 per month, in over a month? Hmm, really? That’s 100% ROI monthly. Now, note that this can actually be done, especially with the power of leverage, but it’s bad and can make you lose all your investment.
I really feel I need to clear the air on somethings, and that’s why I think I should share this with you now so you can come into the industry with the right mind. This would be your solid foundation to build upon.
Below are 7 truths about trading “FOREX” you need to know:
1- Most New Traders Lose All Their Investment:
For the record, according to many studies that are out there, it is said that over 80% of all new traders lose all their investment. This is something brokers don’t like to promote so as not to scare you but it is something you have to know before entering the industry.
Individuals who just know little to nothing about the industry come in feeling like some sought of genius then boom they lose all their hard-earned cash. So, my friend, please know this before you start trading with your money.
2- The Middle Man Always Get Paid:
Now, you may wonder why these so-called middlemen (a.k.a BROKERS) want you to open a trading account with them, and start trading while promising you all sought of rubbish. The simple answer is this, as long as you keep placing trades whether you make or lose money on those trades, these guys get paid! (by YOU!)
So how do they get paid? In simple terms, they either charge you commissions or make use of the market maker system to charge you ‘spread’. Spread is simply the difference between the buying and selling price of an asset. Also, some of these dudes can charge you something we can call “inactivity fees” for not trading with your money. So, you can be paying them money for not doing anything.
So be careful how you fall for all these marketing bullshit you see around you, not all are in your best interest.
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3- Practice Accounts Are Free:
This is one truth I love about trading “FOREX” is that you don’t have to start risking your real funds while you are still new to everything. There is something called a ‘demo account’ that allows you to trade with paper money in real market conditions.
Demonstration accounts are free, and you can use most of them for as long as you like. I like them because they can help you understand what you are actually doing and help you gain some confidence before you put in your real money into use. You can use your money when you think you know enough.
4- Being Correct is Not Good Enough:
When individuals finally get to understand that money is made from trading by correctly predicting the direction of the market, and opening a position in that direction. They feel it’s all there is to be a successful trader, that is a lie.
Successful traders know that to win in the long term, they don’t have to be obsessed with correctly predicting the market. There are other variables that good traders consider to be even more important than being right all the time.
With time, I’ll share these important variables and how you can use and master them.
5- Exits Are More Important Than Entries:
If you know where you are but don’t know where you want to be you can’t know if you’ve reached your destination. If you are totally lost because you have no idea where you are going everything would seem like your destination.
Most new traders like I’ve said, think the entry point is what is most important but it is not. In fact, pro traders consider their exit points before they consider the entry. They know when to exit for the gain and for a loss.
6- Managing Money Well is How to Win Trading:
This the real truth on how successful traders win. Pro traders don’t see trading as just predicting markets, it more from the standpoint of managing money well.
This is more about minimizing risk and maximizing returns. There are several tactics and strategies to do this, and to me, it is what new traders should really focus on learning how to do. It is what separates the pros from the amateurs.
7- Continuous Learning and Practice is a Key Open Secret:
This is probably the most important thing I think every trader needs to know. Continuous learning and Practice cannot be over-emphasized, it helps you to keep growing from one level of understanding to another greater level of understanding.
Any professional that stops learning would not like the effect on his career. In this world, where things are constantly changing, to stay relevant you have to be updated.
You can’t compare a 1990 car to a 2019 car even if they are of the same model. The vehicle must have evolved for the better. Any professional that won’t update himself would go out of date. This does not mean you should change your fundamentals, all cars even from 1990 till date are made to move people on land.
So, as a trader, you may not necessarily need to change your fundamental strategy on which you base your trading system, but you can always update it, and continue learning and practising can help you achieve this.
Good to know you read this post to the very end. Let me know what other truth about trading do you know that people do not know about.
If you noticed I used “FOREX” in a quote. This is to note that trading, in the first place, is not just about forex but just for your understanding I used it. Forex is just one asset class and personally I combine a number of different asset classes to manage my trading risk. I want you to see Forex as an aspect of trading not trading itself.
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ABOUT THE WRITER
My name is Joshua Eriaborosan OFOMAJA (JEO), I solve money and Marketing/Business problems for individuals and businesses.