Due to the recent advancement in technology, we have got easy access to the online trading industry. Even after having such easy access, we are following some of the biggest myths in the Forex market. The professional traders are well aware of the common myths but they don’t have the time to debunk them in front of the novice traders. Being new to this market, you might be thinking about how on earth you can learn about these myths. Don’t worry! We are going to bust some of the lethal myths prevailing in the Forex market.
You should never trade the reversal
Novice traders know very well that they should never trade the reversal. In fact, they consider it as one of the cardinal rules to follow in order to become a professional trader. If you truly believe trading is the right profession for you, you need to learn the process of reversal trading. Even professional traders are taking the trades against the major trend. Unless you learn to identify the key reversal points in the market, chances are very high that you will never learn to execute high-quality trades during the reversal. So, you will always have to lose money once the trend change.
Famous 2% rule doesn’t work
Everyone knows the famous 2% rule in risk management. No one trades the market with more than 2% risk as they think it can cause them big trouble. However, if you open 10 trades and risk 2% in each trade, there is no way you are going to become good at trading. Instead of that, you should limit your trade entry. The maximum number of open trades should never exceed three. If you add the risk exposure level for those three trades it should be less than 2% of the account balance. Click here and learn more about the risk management technique as it will keep your funds safe.
Trade only the major pairs
Everyone thinks major pair trading is much easier and safer. However, the professional traders never love the idea that they should only have the major pairs. They keep on assessing the different trading instruments and find the best possible asset by assessing the market condition. If you limit your trading approach by analyzing the major currency pairs only, the chances are very high that you will never learn to find the best trades in the market. In fact, you will have to wait for high-quality trade signals for a long time. To ensure a steady cash flow, you need to diversify your trading approach from the beginning of your career.
Low-end brokers are best
Novice traders often think that low-end brokers are the best choice for retail traders as they can take their trades without having any major trouble. If you do some in-depth research on the market, you will notice the cost of trading at the low-end brokers are very high. In fact, they will not give you access to the premium trading tools and thus you will keep on making silly mistakes. To execute high-quality trades, you have to trade the market with a premium broker. So, select your broker very carefully or else you will never learn to take the trades in a professional way.
You need to follow strict rules
Everyone thinks that by following the strict rules in the trading profession, the traders can easily make big profits in the market. However, strict rules can end up becoming a huge burden on your trading career. You need to have flexible rules as they will allow you to bring changes to your existing trading method. Unless you revise your trading strategy on regular basis, you will never learn to take the trades like a professional trader. Be flexible with your approach and embrace positive changes to your system. Never think that you have to trade the market with the same old trading method.