As I started trading, I quickly realized that much information on trading is hard to distinguish between facts and myths. So I spend a lot of time doing trial and error in hopes of finding something valid and useful to me.
After many years of trading, I began to realize that simplicity is good and what is obvious is often not the fact that it happens. I hope that by sharing this trading myth, you can avoid the frustration I experienced and speed up your path to profitable trading. So, what are the 5 biggest forex trading myths that will not dis appear.
- Entry process is the most important thing
When I started trading, I knew there was no ‘holy grail’. However, I am obsessed to find the best entry way. I keep thinking of it as long as I get the best login, meaning the price will move in my favor and I’ll get a profit. Do you know even with only a random entry, you can still benefit if you pay attention to the process of exit, position sizing, and trading management?
- Consistent profits
Trading is a marathon not a sprint, therefore the one you are looking for is a consistent advantage. Remember, before determining consistency in your trading, you should know which time frame you are trading.
- Stake no more than 2% of your initial asset every trading.
The 2% trading rule is the basic rule of the trading industry. If you look at the risk of loss, risking 2% makes sense in terms of total loss risk. Risking 2% per trade is too much for your individual risk management. There is no definite benchmark in a risk management. You should consider the type of trader yourself, the performance of your trading system and your risk management.
- Trading is risky
Anything in this world carries your risks and duties to minimize those risks. Risk comes from lack of preparation and knowledge. If you learn to trade hard like other traders, the risk can be reduced to a level that is not harmful.
- The bigger the leverage the bigger the profits?
Always remember that leverage is a double-edged sword. Can increase profits, and also double your losses.