Top 5 trading lies and how to avoid them

Dear Traders,

How many times you have heard Forex mentors, traders and marketers convincing someone to start trading - even when the person has no clue about trading?

So let's assume that you are an ordinary person and a salesperson came to you offering trading with their respected brokers.

There are many types of salespeople.

Some sell ideas, some cars, others lies.

Yes, you heard me. Lies.

There are two primary ways to lie - to conceal and to falsify.

In concealing - the person withholds some information, without saying anything untrue.

When falsifying, the person withholds true information and presents false information as if it were true.

In this article I will highlight several common lies that are prevalent in the Forex trading industry.

You can make 20% profit every month

Yeah right.

This is one of the biggest trading-related lies I have encountered so far.

I've heard several times about brokers sending their agent (aka salesperson) to convince people who don't have a clue about trading, that they can make this return.

Please don't fall for that.

There is no success in trading without proper time investment.

You need numerous hours of screen time to become an expert.

There is a long and complex learning curve - primarily to:

...understand what trading techniques suit each person…

...then learn to use them consistently…

...and repeat..

When you next encounter a sales person, ask if he/she has ever lost 50% of their account, where large capital is lost?

And more importantly, have they recovered it?

Unless you have experience of some serious losses, you won't appreciate what it takes to be successful and consistently profitable.

For example, without risk control you're going to end up with zero.

Being positive and confident alone will not cut it.

Remember, overly confident people are easy pickings for any dishonest brokers.

Forex is not a casino

Forex is not like a casino or entirely random.

Most gamblers don't have a game plan or strategy and for this reason, they don't tend to win consistently.

In essence, they just pay the house to play.

They don't stack the odds in their favour.

Trading needs to be looked at as a business...

...not a gambling opportunity.

The factor determining whether or not you are approaching FX trading as gambling or as a business, is whether or not you have the edge.

A casino automatically has the edge because they make the rules of the game and stack them in their favour.

Forex trading is different because there are no defined rules (other than don't get a margin call), so everyone can approach the activity in their own way.

However, by using a good system/strategy and correct principles of money/risk management - you can stack the odds to your favor and gain the edge.

And if you have logged enough screen time, your odds can spike to 70/30 or even 80/20 in favor of winning.

Forex trading requires large starting funds

Not true.

In this article I show how you can successfully build up your small account using a trusted broker and following your own plan.

This example account has already increased five times its initial investment, from a small deposit.

It's proof that you don't need huge amounts of money to successfully trade.

Focus on higher time frames if you want to make money

Again, not true.

One of my best friends is a professional equity trader and he makes money by trading a 1 to 5 minute timeframe.

Equities are different to the Forex market:

...sometimes 20 pips EUR/USD can equate to 100 pips on the DAX...

...which is more than enough to make your day.

Using multiple time frame for analysis and trading, should help solve any problem you may currently have with time frames specifically.

Some traders simply can't afford high drawdowns and huge stops by solely taking signals on H4 and daily time frames.

Entries on H4/D are usually late ones, as the move started long ago.

Full-time professional traders never lose

Nonsense.

Even professional traders get into trouble when they start letting their emotions dictate their trades.

Believe me - trading with your heart and not your head, can happen to the best of us.

The difference between novice and pro Forex traders, is that pro traders know when to cut their losses.

Whenever a pro trader sees a loss coming they:

...cut losses by getting out as quickly as possible via…

...exiting manually, placing a pre-determined stop-loss or placing a dead stop that goes with the maximum risk threshold per plan.

Do you know about any other trading lie? Let us know in the comments below.

Cheers and good trading,

Nenad