Common Misconceptions you’ll Pick Up from a Forex Forum
This article tries to debunk some of the trading misconceptions found in most forex forums.
Traders usually belong to all kinds of different forex communities. Some congregate in certain blogs, while others hang out in a live trading room with other traders. A forex forum, however, is the most popular kind of online community among traders, as it gives them room to voice opinions and also learn from other traders. Unfortunately, too many traders have ended up being deceived into believing misconceptions that have been regurgitated over and over so much – and by so many traders – that they are often passed off as fact.
What are the Misconceptions you can Pick Up from a Forex Forum?
- Trading systems are the most important part of trading
This is one of the biggest misconceptions in most forex forums out there. It equally explains why the forex system section of most forex forums is the most active. Traders are stuck in a perpetual cycle of trying to find that elusive holy grail. As soon as someone talks about a new system, a significant majority of the traders migrates to the new thread to see what the system can do. If it looks good, some will dump their old strategy and migrate to the new one without blinking! Give it a few weeks and the thread will die a natural death – and the circle continues. If you must be part of a forex forum, do not allow yourself to fall for the forex system merry-go-round. A sound trading system without discipline and money management is useless. So, if your trading system has looked good in back tests but you are still struggling with it, then the problem is with you – not the system.
- You must trade every news release
This is another misconception. Traders feel that if they are not trading the hundreds of releases, and not glued to CNN or Reuters, they will not make money. This is why a thread is normally dedicated to analysing a particular bit of news until its release. Trading in this manner is wrong. In the first place, not all news moves the market. The ones that do move the market do not move it in the same exact manner every time, so news trading is 60% guess work even by optimistic estimates. So, if you decide you do not want to get involved in news trading, don’t allow the pressures of forex forums to get to you.
- It is impossible to make money while trading the daily charts
This is another false one. People feel it is easier to make money off the lower time-frames than it is off the higher time-frames, but this is not true. If you notice that your trading system might give you more profits on the daily charts, then switch to those by all means! The reason that most people stay away from the daily charts is the increased “risk”; but, if you understand money management, you will be able to see that it is indeed less risky to trade the daily charts than to trade the 15 minutes or 5 minutes charts! Take, for instance, a trader who risks $50 per trade on the 15 minutes charts – he will lose at least $150 on a ranging day; at the same time, a trader on the daily charts will only lose $50 if he finds out at the end of the day that his trading signal was wrong!
So, while forex forums can be very helpful most times, do not go with the stereotypes unless you want to lose big!