10 Things to Understand Clearly When Getting Started with Forex Trading

Common Mistakes Investors Make When Learning About Forex

The foreign exchange market is the largest financial playground worldwide, but it is also filled with misinformation. When searching for articles about trading forex online, you will encounter numerous conflicting and unverified opinions. This leads to serious misconceptions about the nature of the forex market, especially when investors do not fully understand what forex trading is and how it operates.

Even experienced traders can face disappointing trading results if they do not understand the true essence of forex. Therefore, analyzing and clarifying common misconceptions about the forex market is extremely important to help you build a solid psychological foundation before embarking on this path.

What Is Forex Trading and Its Main Features

What is forex trading? Simply put, forex trading involves buying and selling currency pairs with the aim of profiting from exchange rate differences. History shows that this market initially was only for governments, national banks, large corporations, and investment funds. However, today individual investors can participate through intermediary companies called brokers.

Brokers provide trading platforms that allow you to execute Buy (Buy) and Sell (Sell) orders at any time. The standout features of the forex market are extremely high liquidity, 24/7 trading activity, T+0 (instant buy/sell), and the ability to trade nearly 60 different currency pairs. This is completely different from the domestic stock market, which operates on T+2.

10 Facts You Need to Know About Forex Trading

1. Get Rich Quickly - But Not Sustainably

You may have heard stories of traders making huge amounts of money from forex. It can happen, but that statement is only half true. The other half is “get rich quickly but not sustainably”. The market is always volatile and requires sharp thinking and strong psychological resilience. If you loosen discipline or act impulsively, the market will wipe out all previous profits from your wins.

2. Brokers Are Scammers, Not the Market

The notion that the forex market is a scam is not entirely wrong, but the truth is the cause lies with dishonest brokers, not the market itself. Due to its lively nature and profit potential, many fraudsters impersonate legitimate brokerage firms to lure investors. You can deposit money easily, but withdrawing can become difficult. Therefore, choosing a reputable broker before trading is crucial.

3. You Don’t Need Huge Capital to Start

A common misconception is that only the wealthy can trade forex. The truth is, each pip (basic price point) of a currency pair like EUR/USD is very small, so to make significant profits, you need to trade in large volumes. However, leverage (leverage) allows you to control a much larger amount of money than your initial capital. For example, with leverage, you can buy 100,000 EUR with only 100 EUR of actual funds. Therefore, you don’t need to be a millionaire to start.

4. Not Just a Short-Term Speculative Market

Many people mistakenly think forex is only for short-term speculators due to high leverage. However, historical currency fluctuations show clear long-term trends. You can definitely apply Buy and Hold (mua và giữ) strategies in this market. Central banks and governments even stockpile foreign currency as a form of long-term investment and risk hedging.

5. Trend Forecasting Plays a Role, But Not Everything

Accurately predicting trends is a way to profit in the forex market. However, over-relying on your forecasts can blind you and lead to impulsive trades without confirmation. When your prediction is correct, of course, you’re happy, but when it’s wrong, it can lead to stubbornness and trading based on baseless forecasts. A better approach is to wait for price action to confirm your forecast before acting.

6. Up or Down, There Are Opportunities to Profit

Price charts of currency pairs never move in a straight line; they always have continuous waves. Whether prices go up or down, you can profit from your Long or Short positions. If you enter the wrong direction, you still have the chance to wait for the price to return. But no one knows how long that will take. Therefore, always set a Stop-loss order for each position to limit losses if the market moves against your prediction.

7. No Need to Change Strategies Too Frequently

Many traders have the mindset of constantly changing strategies to “keep up” with the market. But history shows that old patterns often repeat, and strategies that proved effective before can still bring success. Instead of constantly switching, build a set of strategies that include both short-term and long-term approaches, and make sure you understand each strategy thoroughly before applying it. The best strategies are always simple, easy to understand, and easy to execute.

8. Small Percent Gains Accumulate to Profits

Successful traders do not make huge profits from a single trade but through continuous analysis, disciplined trading, and accumulating small gains on each trade. This does not mean trading constantly. A common mistake among beginners is overtrading — opening too many positions to try to profit from any volatility. But the more you trade, the more fees and margin you lose. Instead, spend time researching deeply to make accurate buy/sell decisions.

9. Not Just for Financial Experts

In the past, the forex market was truly a playground for large financial institutions. It is complex, influenced by many macroeconomic factors affecting price movements. However, today, individual traders without a financial background can also succeed. The key is investing time to learn, gaining experience from real trades, and not giving up after failures.

10. Learn from Experts but Think Independently

When starting out, actively communicate with veteran traders to gain experience. Initially, you may not know how to trade or develop your own strategies, so listening to professional traders is normal. However, they are not infallible and do not always make accurate forecasts. Receive information wisely, but always remember that you are fully responsible for your own trades, not others.

Should You Join the Forex Market?

Compared to stock investing, forex can offer higher returns. While stocks may yield 10-20% annually, the forex market allows you to achieve similar profits within weeks or even days. Of course, higher profits come with higher risks. But risks can be managed if you have the skills to control them.

If you have a strong mindset, know how to manage risks, and are willing to take calculated risks, the forex market is an exciting investment option. Look for a reputable broker with low trading fees, as they will be an important partner in your trading journey. A trustworthy broker will help you minimize risks and maximize profits.

Conclusion

The forex market still holds many truths that this article cannot fully cover. To succeed in forex, you must understand the market’s true nature and avoid hasty judgments when risks appear. Information about what forex trading is and how it works is widespread online, but not all of it is accurate. Believing unverified information will put you at a disadvantage.

Take the time to deeply learn about the forex market, develop your own strategies suited to your trading style. By doing so, you will avoid common mistakes and increase your chances of success on the path to becoming a worthy trader.