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Common trading myths that need to be ignored

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In a recent article, we talked about how you can successfully use forex trading to supplement your income. Provided you know what you are doing, this is certainly true. Still, you do need to be mindful. In this article, we will list some of the misconceptions that linger around trading. You believe them at your peril, as you may lose money because of them.

Myth #1: It’s about making big money

This is true to an extent, but as you are putting down your own money to begin trading in the first place, your priority is not to make money, but to protect the capital you have already put down. You need to strategize, knowing where and when to spend your money. You should bide your time, not making a move in the trading market without a little research. You have to defeat the temptation to battle other traders in the market. In short, you need to look after your money, and while you will take risks, you still need to look for those opportunities that are almost guaranteed to help you win big, instead of jumping into something blindly. Only then will you start bringing in the money.

Myth #2: You need to be good at maths

The key to making money is not only about using complicated algorithms to predict the market, so don’t assume you need to be a hotshot with numbers. You can make use of the online trading software provided by Algo Terminal to do this for you if maths really isn’t your thing. To be a successful trader, you need to rely on your gut instincts more than anything, and while logic should play a part too, you don’t want to spend too much time over-thinking when your gut is telling you what you need to be doing. You may miss out on making money if you do.

Myth #3: You need to have a lot of money to make money

Not true at all, as a successful trader can begin with a small pot of cash and still see it increase. In fact, those with a large capital can quickly lose it if they make the wrong move, so it doesn’t matter what your initial outlay is. Especially if you are new to the trading business, the key is to do as we have said already: be careful with what you do have and preserve it at all costs. For this reason, you shouldn’t blow all your money on a trade. Always keep some back just in case disaster strikes. While trading can be very profitable, it’s not worth going bankrupt over.

Myth #4: Trading is basically gambling

This isn’t necessarily true, despite the warnings of your nearest and dearest to steer clear. Certainly, if you don’t know what you are doing, then yes, you are kind of gambling your money away. As we said, you do need to do some research before trading your money, such as getting an understanding of the market, and through speaking to those people more experienced than you. In gambling, the odds aren’t in your favour, but with trading, you can educate yourself to better eliminate the risks involved. So, unlike those slot machines at the casino, you aren’t gambling. Still, some principles are the same. You should limit your budget so you don’t cripple your bank fund, and it’s better to quit while you’re ahead if you are at all unsure about what you are doing.

Finally

We hope we have separated some of the fact from the fiction for you, so get those myths out of your head immediately. Continue your research, benefit from the experience of others, and then begin trading better informed and able to better your odds at making money.

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