10 Facts About Forex Trading That Traders Must Know to Survive

Forex Market: Dangerous Misconceptions That Need Clarification

The global foreign exchange market (Forex) is the largest playground in the world’s financial system, but it is also filled with misconceptions. If you are a forex trader looking to enter this market, the abundant information online—though plentiful—can easily lead you down the wrong path.

The truth is, 90-95% of new forex traders will quickly incur losses. This is not due to lack of luck but because they operate based on false notions about the nature of forex trading. Successful investors share one common trait: they understand what will happen before entering the market.

10 Facts About Forex Traders You Need to Understand Clearly

1. Getting Rich Quickly ≠ Sustainable Wealth

It is true that some forex traders make money very fast in Forex. But the story doesn’t end there— they can also lose everything quickly if they do not control their psychology.

The Forex market requires continuous mental application. After a few consecutive wins, if you become overconfident and impatient, the market will “wipe out” your account in just a few uncontrolled trades. Sustainable profits come from discipline, not gambling.

2. Scamming Brokers, Not Forex

When you say Forex is “scam,” you are actually talking about untrustworthy brokers, not the foreign exchange market itself. Since Forex is a vibrant market with high profit potential, many dishonest individuals impersonate professionals to lure investors.

Warning: you can deposit money easily but cannot withdraw it. Before choosing a trading platform, thoroughly check its history, legal licenses, and community reviews.

3. You Don’t Need to Be a Millionaire to Trade Forex

The profit unit in Forex is pip. For the EUR/USD pair, 1 pip = 0.0001, meaning you need to buy 100,000 EUR to earn $10.

Sounds like a huge capital requirement, right? That’s why leverage (leverage) exists. You can control 100,000 EUR with only about 100 EUR of actual capital. This opens the door for investors with small capital.

4. Forex Is Not Just for Short-Term Traders

Most people think Forex is a market for traders who operate quickly with high leverage. But historical exchange rate trends show clear long-term patterns—you can totally apply a “buy and hold” (buy and hold) strategy.

Governments and large banks stockpile foreign currency as a form of long-term investment. Currency is also a tool to diversify portfolios or hedge risks when other assets are illiquid.

5. Trend Forecasting Is Not the Only Key to Winning

Accurately predicting price trends is a way to profit, but it’s also where many forex traders make mistakes.

When predictions are correct, you rejoice. But if wrong, the feeling of frustration can trap you in a loop: continuing to trade based on your “certain” forecast. A better strategy is: forecast, then wait for confirmation from the price chart before opening a position. This filters out weak trades.

6. Markets Offer Many Opportunities but Require Discipline

Price charts of currency pairs always fluctuate like waves. Whether prices go up or down, you still have opportunities to profit through Long or Short positions.

However, many traders make the mistake of not setting Stop-loss orders. If you place a Long order incorrectly, the price may rise again afterward—but for how long? No one knows. Always set Stop-loss for each position to reduce losses when the market turns against you.

7. Old Strategies Still Have Value if You Understand Them

A common mistake is constantly changing trading strategies. You think: “The market changes, so I need a new strategy.”

The truth is, history repeats itself. Macro factors affecting prices like interest rates, monetary policies follow cycles. A good strategy is: build a portfolio of 3-4 short- and long-term strategies, understand each deeply, and apply them at the right times.

8. Small Percent Gains Accumulate Over Time

Successful forex traders do not make huge profits from each trade. Instead, they accumulate: analyze the market → trade → earn 1-2% profit → repeat hundreds of times.

Newbies often make the mistake of overtrading: opening too many positions, trading in multiple directions, just to capitalize on small movements. The result? Transaction fees accumulate, margin gets depleted. Instead, spend time learning, wait for the right opportunity, and open trades with high probability of success.

9. You Don’t Need a Financial Degree to Become a Trader

Initially, Forex was a market mainly for large organizations due to its complexity. It is influenced by many macro factors: interest rates, political events, trade policies.

But many individual forex traders succeed without a financial background. The key is: invest time in learning, accumulate experience with each trade, and don’t get discouraged by losses. Discipline and perseverance outweigh degrees.

10. Listen to Experts but Take Responsibility for Your Decisions

When starting out, learn from seasoned traders. They have valuable experience to share. However, they are not infallible— their forecasts are not always correct.

Most importantly: you are responsible for your trades, not anyone else. Use expert information as a reference, but build your own trading system and follow it strictly.

Is Forex Worth the Risk?

Compared to traditional stock investing (makes 10-20% annual profit), Forex allows you to achieve similar returns in a few weeks or even days. Of course, the risks are proportionally high.

But danger is not uncontrollable. If you have:

• Steady psychology (not letting emotions influence decisions)
• Discipline (stick to your trading plan)
• Risk management skills (set Stop-loss, control capital)

then Forex is a suitable playground.

Conclusion

The truth about forex trading extends far beyond these 10 points. But the common trait of all successful traders is: they understand the market’s nature to avoid disappointment.

Abundant information on the internet—how much is accurate, how much is false. If you believe everything you read without a solid foundation, you will only set yourself up for failure.

Take time to learn about the market, develop a strategy suited to yourself, and execute it with discipline. Then, you won’t have to worry about false information—because you will have the knowledge to distinguish right from wrong.