The biggest financial market in the world is also a big subject of endless rumors and myths.

There are many kinds of investment myths associated with currency trading online and unfortunately most newcomers get into the foreign currency exchange market believing them.

Here are some of the most common investment myths associated with the forex market.

Myth #1:     Investing and Making Profits in the Forex Market Is Easy

All the highlighted forex market success stories really do make trading in the forex market seem like the easiest investment option ever.

In a matter of days, hours, and even minutes, a trader can make profits of staggeringly high sums and do the same over and over again.

But before you start selling off your assets to invest in forex trading and reap absurd profits, you need to keep some things in mind.

First of all, you need to understand that to be successful in currency trading you need to involve yourself heavily in research.

You also need to meticulously develop a trading strategy to achieve any kinds of profits.

Myth #2:     Forex Trading Is a Form of Gambling

Trading in the currency market online shares lots of similarities with many forms of gambling. There are even gambling strategies that can be successfully implemented in forex trading to produce high profit levels.

Additionally, many new forex brokers trade currency without any sort of strategy or plan and this makes it seem like gambling.

However, investing in the forex market is not gambling. It is a highly structured business endeavor.

You need to develop a well thought out trading plan in order to be successful in online forex trading.

The trading plan needs to be thoroughly back tested and even forward tested before being implemented.

Before using it on a live account, you need to use the strategy on a demo account and test how it will perform in a trading environment.

Myth #3: Trading On Margin Is Risk Free

Almost every forex broker will allow you to trade on margin. This means with very little of your own cash, you can control a very large amount of investment cash.

For instance, with only $200 in a micro account, you can receive a 500:1 leverage allowing you to control and trade with $100,000. This has led to many traders thinking that they are trading at no risk to their own finances.

The truth is that the broker will not allow you to take a leverage amount that is not fully covered by your total forex account. In case you place a request for a leverage amount that exceeds your deposit, the broker will put in a “margin call”.

Additionally, if you lose your trades you are very likely to not only wipe out your account but also become heavily indebted.

This is because the leverage offered by a broker is basically a loan that you have been extended by the broker to enable you trade large amounts.

Myth #4:   Forex Trading Is a Low Risk Venture

Many new traders think that just because the currency market is the largest market in the world then there is some form of automatic protection for their forex investments.

The fact is that the forex market is a highly unregulated market with most brokers not having any licenses or being under any regulatory or supervisory bodies.

Additionally, the currency trading market is a highly volatile market whereby your investments can get quickly depleted if you make the wrong call on a trade.

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Myth #5: Forex Trading Is a Path to Quick Riches

There are many success stories that will give some credence to this theory. And it is a possibility, at least in theory.

However, most of the successful traders in the forex market had to bide their time, go through a learning curve, suffer many losses, and make endless analyses to create riches out of their forex investments.

To be a successful forex trader, you have to learn patience and discipline. Accept your losses and use your strategy to earn reasonable profits.

If you make superb riches, then you will be an exception rather than the rule.

Myth #6:  There Are So Many Jobs in the Forex Market

There are very many scam brokers who have turned forex trading into some sort of pyramid scheme. What they do is that they target members of a minority group and offer them executive positions in their brokerage firms.

The qualification required is that the new “employee” has to bring in a number of new investors each paying a certain fee. To make profits, the investors are also required to recruit more investors and so on and so forth.

The truth is that, most retail forex trade nowadays happens online, through online brokers using online trading platforms.

Most of these brokerages are just manned by a few people, each with an area of specialization. If anyone is offering you an employment opportunity, you should not have to pay anything for that.

Summary

Investment myths lead to false expectations of the forex market’s profit potential thereby grossly limiting a trader’s chances of gaining reasonable profits.

To become a successful trader, you have to guard against believing in any of the baseless myths and trading strictly on proven facts.

The best thing a trader can do is maintain discipline and keep an open mind. Realize and accept that occasionally you will suffer losses but if you stay the course you might end up a very successful trader.