If you’re considering forex trading, you need to know the hard truths that come with it. In this article, I reveal 30 blunt truth about forex trading that you need to be aware of.
It brings back old memories; 2007 was the year I began my journey in forex trading.
An Experience Filled With Lessons – True Story By a Forex Trader
Immediately after college, my dad advised me that I needed the skill to keep up in a fast-changing world.
He said education is more than the 4 walls of the classroom. Then he arranged a tutor to teach me about forex trading.
I started with Northfinance Forex Broker.(this broker no longer exists)
My mentor explained all the fundamental aspects of trading. We print news sheets from forexfactory.com to prepare ourselves to trade the news every week.
Once the actual result is out we trade it immediately. Sometimes we are faster and sometimes we are late. Good old days.
He taught me how to use RSI overbought or oversold, MACD, and Parabolic SAR. Just mention any kind of indicator. I learned how to use them well.
I graduated from my forex lessons and I all expected was roses.
After facing a setback with my previous broker, my dad deposited funds with a new broker called Marketiva, where I began trading with 10,000 quantities, we call them lot sizes today in other brokers.
Despite my success in earning profits as a beginner, my mother remained sceptical of the legitimacy of trading for profits online.
But I was convinced that with enough capital, I could print even more money and make my family millionaires. My dad even borrowed thousands of dollars to invest in my trades.
Unfortunately, I eventually lost all the funds and experienced many sleepless nights dreaming about lot sizes and trades.
However, I didn’t give up and eventually developed many new strategies involving trading news events and programming forex robots. Despite making significant profits, I did not withdraw my funds. The broker then claimed I wasn’t trading according to their rules and deleted all my earnings.
Through my over 16 years of experience, I’ve seen both the highs and lows of forex trading, and I hope the truths about forex trading that I have shared in this article help you on your way to becoming a profitable forex trader.
Truth About Forex Trading – 23 Truths
1. Forex Is The Same As Other Businesses Where You Buy And Sell, Where You Lose And Win, And Where You Learn Or Quit.
Forex trading is not a game of chance but a business where buying and selling are the norms.
Like any other business, it involves risk, and not all trades will be a winner. But you can become a successful forex trader by developing a sound trading strategy, being patient, and being willing to learn from your mistakes.
Remember that success takes time, resulting from hard work, discipline, and a willingness to learn and grow.
2. Forex Is Not A Quick-Rich Scheme, Although Most People Approach It This Way
Any business you treat like a quick-rich scheme will also treat you like a fool because you could lose all your funds in a twinkle of an eye.
The lure of quick riches is a common pitfall many fall into when they enter the world of forex trading; therefore, it is essential to recognize that Forex is not a get-rich-quick scheme.
Those who treat forex trading as a quick and easy way to make money often lose everything. Forex trading requires time, patience, and effort, like any other business venture. It is not a way to make easy money overnight.
Refrain from imitating those looking for ways to double and triple money daily, weekly, and monthly. Instead, let them keep chasing shadows.
If you see me tell you to make 100% monthly, RUN AWAY from me, and NEVER EVER imitate me. The end is very terrible. Patience pays in the long term in FX.
Set realistic goals. Stable 30%-70% Returns per YEAR is a Huge Success. If you can get there – other investors find and invest with you.
3. The Only Strategy That Works In Forex Is The Strategy That Makes Money For You.
One of the most important things to remember when trading Forex is that the only strategy that works is the one that makes money for you.
This may seem obvious, but many traders follow the latest trading trends or strategies that may not best fit their particular trading style or risk tolerance.
It is crucial to remember that everyone has a different trading style, and what works for one trader may not work for another.
Spending time developing a trading strategy that suits your personality, risk tolerance, and trading goals is vital. This may involve backtesting various systems or seeking guidance from a reputable trading mentor.
4. Forex Trading is not the Same As Spots Betting, Binary Options, Casinos, Lotto and Other Dice-throwing Games
Forex trading is not the same as sports betting, and it is crucial to understand this difference to succeed in the forex market.
While both involve placing bets, forex trading is not based solely on chance or luck but rather on analyzing market trends, understanding economic indicators, and making informed decisions.
While sports betting may offer the allure of a quick win, forex trading requires patience, persistence, and a long-term mindset. Treating forex trading as a serious business and building a solid foundation of knowledge and skills can increase your chances of success in the market.
5. Wait A While Before Telling Everyone You Are A Forex Trader: Friends, Family Members, Colleagues, And Relatives.
Waiting a while before telling everyone you are a forex trader can help you avoid unnecessary pressure and interference and protect yourself from potential scams.
When you tell others about your forex trading, they may begin to ask you questions or expect updates on your progress.
This can put unnecessary pressure on you, especially if you are starting or are not yet comfortable with your strategy. Waiting until you have more experience and confidence can help you avoid this pressure.
6. Forex Trading Is Not A Do-Or-Die Affair. It Is Not Competition & You Can’t Compete With Anyone
Another common misconception about forex trading is that it’s a competition, and traders compete against each other.
The forex market is so vast that there is room for everyone to trade and make profits.
Traders should focus on their strategies and goals rather than comparing themselves to others.
It is not a competition, and you cannot compete with anyone. One of the biggest mistakes traders make is viewing forex trading as a high-pressure situation where they must win or lose everything.
This mindset often leads to reckless decision-making, over-trading, and, ultimately, losing money.
7. Don’t quit your job immediately after you start seeing profits in forex trading.
Quitting your job immediately after making profits in forex trading can financially put you in a vulnerable position.
You may experience periods of losses in trading, and without a stable source of income, you could find yourself in a difficult financial situation.
It is crucial to have a financial cushion to fall back on in case of losses in trading. This cushion could come from your job or other sources of income.
Respect the process. Go to your job while you trade. You can continue doing your job and continue trading.
If your trading affects your job, turn your forex strategy and idea into a robot or expert or even a semi-expert that sends you a signal to your mobile phone while you do your job.
I can help you turn your idea into a robot or semi-robot.
8. Always Take a Calculated Risk – No one Can Accurately Predict The Future.
It’s important to remember that the forex market is highly volatile, and risks are always involved.
Taking calculated risks can also lead to significant rewards, including high returns on investment. In addition, traders must balance their desire for profits with their willingness to accept risks, which will vary depending on each individual’s trading style and risk tolerance.
Every trader is supposed to have at least 9000 pips worth of free equity to weather any terrible shock capable of dropping 1000 – 5000 pips in minutes & quickly rebounding after wreaking havoc on accounts.
9. Your Starting Capital Matters in Forex
Start with capital that allows you to make trades comfortably without risking too much of your funds.
$10,000 is a good starting point for those new to forex trading. But it’s important to remember that the amount you start with is not the only factor in your success – your trading strategy, risk management, and discipline also play essential roles.
Why $10,000? Read this; How to invest in forex trading. $10,000 is a good place to start.
10. Money Management Is Important In Forex Trading
Proper money management is necessary because, in Forex trading, losses are inevitable. Even the most experienced traders have lost trades.
With good money management, traders can minimize their losses and increase their chances of making profits.
As a trader, you must set realistic profit targets and stop-loss orders; you should only risk 1-2 % of your trading account balance on a single trade.
11. Leave Your Emotions on the Bed When Trading Forex
This means approaching trading with a clear and rational mind, focusing on your strategy and market analysis rather than allowing your emotions to take over.
Establishing and sticking to trading rules may be helpful, even when emotions are high.
Suppose you struggle to control your emotions while trading, take a step back and practice self-awareness. Recognize when emotions start affecting your decisions and take a break to refocus.
12. While You Trade Forex, You Should Have Another Source of Income
Continuously invest alongside offline or online businesses because your strategy will not always be active.
Also, trading profits can fluctuate and will not always be consistent.
Having a separate source of income can also provide additional funds that you can use to invest in Forex trading.
I won’t advise you to force any trade. Can you make Forex a full-time job? Let me answer this in the next paragraph.
13. Forex can be a Full-Time Job if You are Disciplined and Serious About It
I started trading Forex full-time many years ago. If you have read some of my experiences, it took much work.
I lost money but gained many skills, from advanced technical analysis, money management and strategy automation with MQL4 and MQL5 programming languages.
Today, I run this blog full-time as a forex trader. I also provide my trading tools and work as a freelance forex account manager.
Can you make Forex trading a full-time job like me? It depends on you.
You must be willing to work hours to learn the ins and outs of the market.
This includes understanding the fundamental factors that affect currency values and technical analysis techniques for predicting market trends.
One thing to remember is that Forex trading is not a guaranteed source of income, and there will be times when the market goes against you.
14. Personal Discovery is the Best Skill in Forex Training, Plus What You Learned from an Experienced Trader
Notice how my personal experience has shaped my forex trading career. If you ever consider taking forex trading as your full-time job, you must craft a path for yourself. How?
Personal discovery involves :
- Learning from your own mistakes and successes
- Developing your trading strategies
- Honing your skills through practice and analysis.
Doing this gives you a deeper understanding of the market and what works best for you, allowing you to make better-informed decisions and trade more confidently.
Learning from experienced mentors and traders can also be beneficial as they can provide valuable insights and guidance. However, it is essential to remember that everyone’s trading style and approach are unique, and what works for one trader may not work for another.
15. Don’t Ever Buy an Automated Robot or Indicator Strategy If You Do Not Know How It Works
The fastest way to know if your idea or strategy will work is to turn it into a robot or semi-robot and backtest it with actual data for at least 14 years. I regret not knowing this back in 2007 when I began this journey.
I bought a lot of worthless forex robots and blindly relied on them, which cost me a lot.
Therefore, Only buy an automated robot or indicator strategy if you know how it works, or you may end up blaming yourself after losing your hard-earned money.
Demo trading is suitable. But like I have said: First, Backtest with real data, demo trade, then go to live.
16. Focus On Returns Rather Than Bragging About Pips Earned
Focusing on your returns, or the percentage of your investment earned, will give you a better understanding of your overall success.
For example, the overall return may be minimal if you make a trade that results in a profit of 10 pips, but you only invest a small amount of money.
On the other hand, if you make a trade that results in a profit of only two pips but invest a large amount of money, the return may be much more significant.
17. Don’t Lend Money From The Bank To Trade Forex
What happens when you borrow money to invest in forex trading?
You set yourself up for unnecessary pressure and self-inflicted emotional blackmail as you try to pay back and still meet up with loan interests quickly.
Borrowing money will influence your trading psychology and cause you to take unnecessary risks.
18. Beware of Forex Traders on Instagram
I have an account on Instagram myself, where I publish forex trading content.
You should avoid repeating my mistake of blindly following the so-called gurus that lured us into trading through mouth-watery seminars or webinars.
Most forex trading accounts on Instagram flash dollars online and post fancy cars, vacations and houses.
Many of these people are scammers waiting to pounce on your naivety. Be careful.
19. There Is a Myth Called “Late Entry” in Forex Trading.
The myth of late entry in forex trading refers to the belief that entering a trade after it has already started moving in a particular direction is too late to profit from.
This is not necessarily true, as there are many opportunities for profitable trades throughout the life of a market trend.
Entry opportunities are endless. You have to find your price level (let it be at the right time) & not someone else’s.
We see things differently and remember to be patient. If the train of opportunity passes, another will come. PATIENCE is key.
20. Stop Loss Is a Lifesaver, but Other Ways Exist to Get Out of the Trade
It is essential to have an exit strategy in place to limit potential losses. One popular method is a stop loss, which automatically exits a trade once a certain price level is reached. While stop loss is a valuable tool, there are other ways to exit a trade that traders should consider.
- Trailing stop,” which is an order to close a trade if the market moves a specified number of pips in your favour.
- Take profit” order, which is an order to close a trade when the market reaches a certain level of profit.
- You can use a time-based exit strategy, where you exit the trade after a certain amount of time, regardless of whether or not the trade is profitable.
21. Forex Brokers Can Make You Go Broke – That Is Why They Are Called Brokers
Choosing your forex broker is crucial, as it can make or break your trading experience. Some brokers trade against you.
- Some may have hidden fees or manipulate the market, making it difficult for you to profit.
- Other brokers may also have poor customer service or unreliable trading platforms, leading to costly mistakes and losses.
- Some might make it difficult for you to withdraw your deposits or earnings.
Look for brokers that are regulated by reputable financial authorities and have a proven track record of providing excellent service to their clients.
22. Mt4 or Mt5 indicators Are Not Always Dependable
Yes, indicators do work, but they are not always right and dependable. Let me explain. All forex indicators respect price. They follow the price. Not the price following them.
All those indicators have their mathematical formula for looking backwards and giving signals. They predict market movements based on these formulas.
Take, for example, if a forex indicators tell you to place a buy trade, and then a piece of financial news comes out which is against the signal pops up. The MT4 indicators do not know the future. They are lagging indicators.
Anything that makes you money in forex works. Indicators are predicting based on the past, and the past cannot always tell you the future.
23. Copy Successful Traders
You can avoid making gross losses and mistakes by copying a successful trader. You might lose a lifetime fortune if you want to do everything yourself.
Note: Many forex traders online wanting to help you out are scammers. What about me? Only trust me; once you have seen my live trading account history for my account history, then you know if I am a scammer or not.
To avoid scams, Put this in mind:
- Ask for Live trading accounts. Usually, you can log in to see for yourself
- Make sure Its a real person and not a scammer
- You can use trade copying software of platforms to copy other traders.
- Be sceptical of Get-rich-quick schemes. Beware of traders who claim to double your investment in a few days.
Summary of the Truths About Forex Trading
The first rule of any investment is INVESTIGATION.
Investigate ? your mentor, your strategy, and any vendor online selling any forex-related idea, software, and signals
Forex is real but are you also real? Are you realistic?
Those who know the truth are not equal to those who love it.
If you wanna gamble, I would give you a lift to Las Vegas.
Here is a summary of the truth about forex trading:
- Forex Is The Same As Other Businesses Where You Buy And Sell, Where You Lose And Win, And Where You Learn Or Quit.
- Forex Is Not A Quick-Rich Scheme, Although Most People Approach It This Way
- The Only Strategy That Works In Forex Is The Strategy That Makes Money For You.
- Forex Trading is not the Same As Spots Betting, Binary Options, Casinos, Lotto and Other Dice-throwing Games
- Wait A While Before Telling Everyone You Are A Forex Trader: Friends, Family Members, Colleagues, And Relatives.
- Forex Trading Is Not A Do-Or-Die Affair. It Is Not Competition & You Can’t Compete With Anyone
- Don’t quit your job immediately after you start seeing profits in forex trading
- Always Take a Calculated Risk – No one Can Accurately Predict The Future
- Your Starting Capital Matters in Forex
- Money Management Is Important In Forex
- Leave Your Emotions on the Bed When Trading Forex
- While You Trade Forex, You Should Have Another Source of Income
- Forex can be a Full-Time Job if You are Disciplined and Serious About It
- Personal Discovery is the Best Skill in Forex Training, Plus What You Learned from an Experienced Mentor and Trader.
- Don’t Ever Buy an Automated Robot or Indicator Strategy If You Do Not Know How It Works
- Focus On Returns Rather Than Bragging About Pips Earned
- Don’t Lend Money From The Bank To Trade Forex
- Beware of Forex Traders on Instagram
- There Is a Myth of Called Late Entry in Forex Trading.
- Stop Loss Is a Lifesaver, but Other Ways Exist to Get Out of the Trade
- Forex Brokers Can Make You Go Broke – That Is Why They Are Called Brokers
- Mt4 or Mt5 indicators Are Not Always Dependable
- Copy Successful Traders
- Can you make living trading forex?
- where does the money go when you lose in forex trading?
- 18 Classified Forex Trading Tips –
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