You just started trading, and you are already hearing all the rainbows and unicorns about trading success. You start to see about the holy grail strategies online, 100% returns monthly, the lambo and the girls on social media. “Man, I can do this too!”, that’s the last thought in mind before you blow your trading account.
So… What happened? On today’s trader journey series we are going to have
Common Trading Myths Debunked
Some myths are misunderstood, and some myths are designed to sell you “the dream lifestyle”, but we’re ready to help slap your face with some truth today. Read on!
Myth #1 You need high win rate to be profitable.
NEGATIVE. Look at the casino’s roulette. All it takes for the casino to win money is just by making sure it’s winning rate is slightly more than 50%. Yes, not 80% or 70%.
It is normal for every trader on some point of their journey, try to focus on winners. But the truth is, you don’t need to win all the time to be profitable! You don’t need to find pinpoint market turning points or have 90% accuracy to be profitable. Be like the “house” in Casinos, they don’t win every hand, but with a slight edge over the players it equals to huge profits consistently in a long run.
Focus on your trading execution, your system rules and your equity curve, not your win rate.
Myth #2 Trading will help me get rich fast.
NOPE. Almost all traders come to the forex industry, hoping to make it big overnight and become the next George Soros. Eventually they all become margin call traders when their account goes bust. What happened? Because you are focusing on the wrong thing: Money and Wealth.
Treat trading like it is a business. It takes time, effort and reinvestment in a long run to be consistently profitable. Remember, profits and growth are just consequences of you executing your trades efficiency.
Focus on your PROGRESS, not on your results.
Myth #3 Trading entries are king
Trading entries are only ONE aspect of the whole trading process. Most traders like to analyze or learn how to get in a trade and spend most of their time researching the best method of entry strategies.
But remember, there are also other elements like exits, trade management, risk management and psychology. It is the combination of all these elements that make up a great trade.
You may have 100% pinpoint accuracy on entries, but you will always end up in a loss without taking other elements of trading into consideration.
Myth #4 Complex Strategies are the best
The truth is, simple can be good, complex can be also good, but were your methods being put into research and practice in a systematic way before you utilize it? Many methods sound good in theory, but they were never tested for profitability or usefulness. The main idea is to always test your method thoroughly and find the method that suits you best!
Do hypothetical back-test on your system and have at least 5 years of data. Test your system throughout different market cycles and see how it performs throughout time.
There are certainly more trading myths out there but these are the 4 main trading myths that every trader will encounter. Trading takes time and effort to master. The main goal is to speed up your learning curve so that you’ll attain mastery level that take people years to achieve.