Below are six common beliefs traders follow.
1. You need to always be in the Market lest you Miss a Move
Traders are keen with eagerness and they think that if they are in the market they can clasp the giant move. Well they may – but probabilities are they won’t.
To save from losses and paying commissions that deplete your account stay out of the market until you see a big trend.
2. Increase profit potential and reduce risk with diversification
Diversification could just dilute your profit.You strike a big move but and your other deals lose, or give you only borderline profits leaving you with zero profit. Many believe that currency trading is about calculated risks – if the trade looks good, one needs to hit it hard for huge profits.
3. It is safer and more profitable to participate in Day Trading rather than Long Term Trend Following.
Many brokers will make this statement. However day trading often requires more upfront cash and you will pay commission to the broker.
4. Timing the Market is the perfect way to make profits
To Time the Market means: To predict where prices are going to top and bottom. The odds are against you with this type of trade. You may have more success if you wait for a confirmed trend and then participate. You may not buy at the very bottom or sell as high as you could but you may be able to make a profit and limit loss.
5. Markets are the same even to this day as they were ages ago
Bunkum! Trends now are much more capricious than they were half century ago. These days, with the web, price facts and figures touch every corner of the sphere in a jiffy. This upsurges unpredictability as all have the same info and news at once and most of the people try to enter into the market at a time.
6. To Make Money Use a Black Box System
You can buy a system from a merchant for a few 1000 dollars and it can benefit up to 100% gain every year. These systems generally have a theoretical track record and use price facts where the results are already acknowledged and obviously the logic of the system remains hidden from you and may not have a sound basis.
