Trading illusions.
When trading Forex, more than anywhere else, a lot of different illusions arise, which often become the main reason for
deposit withdrawals or large losses.
Many traders have a certain idea about Forex, as if there are certain rules and patterns.
Yes, to some extent this is true, but you cannot blindly trust the laws of the market and technical analysis; you should always be prepared for troubles and insure your transactions.
The main illusions of trading include:
• Ease of making money - at first glance it seems that making money is as easy as possible, but this is only a trap for an inexperienced trader.
• After the breakout, the price will move further - but false breakouts also happen, when, having broken through an important level, the trend, having passed several points (tens of points), makes a reversal and begins to move in the opposite direction.
In this case, transactions with pending orders are especially at risk; the trader may not control the situation during a false breakout, which will lead to significant losses.
It is for this reason that it is so important to use stop loss even when placing pending orders. • The price has a bottom and a ceiling - how many times have you encountered a situation when you think that the price has reached the limit and started moving in the opposite direction, but as a result, the expected reversal turns out to be just a correction and, at best, a stop loss is triggered .
• Technical analysis can be learned in theory - you can only learn the basic methods and techniques, but without practical training you are unlikely to make a profit.
Only practical trading provides the skills necessary to make money. • You can make money on Forex with a large leverage - yes, you can make several successful transactions with a leverage of 1:500 or even several dozen, but the result is always predictable - losing your deposit. The only exception may be the acceleration of the deposit , and even this is not always successful.
Most pros trade with a leverage of no more than 1:10, but to make money in this case you need a substantial amount of several tens of thousands of dollars.
• There are profitable advisors - I have never met a person whose advisor has been trading for more than six months. Everything usually ends with the loss of the deposit. A less risky alternative to advisors at the moment is Forex Copy or investing in a diversification trust .
• News always influences the trend - there are many examples when even important news is not able to reverse the existing trend, for this reason, entry into the market is carried out only after the final receipt of confirmatory signals.
If you wish, you can name a dozen more illusions that relate to market analysis or the technical part of trading. The main thing in Forex trading is to always be ready for changes and not allow large losses to occur.