Many falsehoods and misconceptions are floating around about Forex trading in Singapore. We will debunk 12 of the most common ones in this post. We hope to provide a more accurate picture of what FX trading in Singapore really is.
FX trading is only for those with a lot of money
Most people wrongly believe that you need a lot of money to start trading forex. In reality, you can start with as little as $100. You first need to look for a reliable online broker with a reasonable leverage ratio. With leverage, you can trade with more capital than what you have in your account. If you have a leverage of 1:100, it means that for every $1 you have in your account, you can trade with $100.
Be an expert to trade FX
It is not valid anymore that only economics specialists can trade FX. With loads of online tools available to traders, and the willingness to learn, anybody can try trading. Resources such as trading courses, e-books, and articles like this one, can help you learn more about how to start trading.
You need a lot of time to trade FX
Again, this is not true. You can trade FX for as little or as much time as possible. With only limited time available, you can open a short-term position. Or, if you want to take a longer-term view, you can hold a position for weeks or even months.
FX trading is risky
In FX trading, all forms of investing carry some risk. However, you can minimize your risks in FX trading with proper risk management. For example, you can use stop-loss orders to limit your losses.
Predict the future to succeed in FX trading
It is perhaps the most common misconception about FX trading. Many people think that you need to have a crystal ball to succeed in the market. The truth is, no one can predict the future with 100% accuracy. Instead of forecasting the market, it’s better to focus on analyzing and understanding the underlying fundamentals.
You can get rich quick from FX trading
Get rich quick schemes are usually just that – schemes. While making good money from FX trading is possible, it takes time, effort, and discipline. You won’t become a millionaire overnight.
All brokers are created equal
It is not valid. There are many brokers, and not all are created equal. For example, some brokers charge higher fees than others. Some offer better customer service than others. And some have more experience than others. When choosing a broker, be sure to do your research and choose one that is reputable and suits your needs.
Trade all the time to make money
It is false. You don’t need to be glued to your screen 24/7 to make money in FX trading. If you trade too often, you might lose money. It’s essential to have a trading plan and stick to it. Meaning knowing when to enter and exit trades and how much money you are willing to risk.
You can’t lose more than you invest in FX trading
It is not valid. While your broker may offer a margin account that allows you to trade with leverage, you can still lose more money than what you have in your account. It is why it’s vital to use stop-loss orders and limit your risks.
You need to know everything about the currency pairs you trade
Again, this is not true. You don’t need in-depth knowledge of every currency pair you trade. It’s often better to focus on a few pairs that you understand well. This way, you can keep track of the economic factors that affect them and make better-informed trading decisions.
You can’t make money if the market is going down
It is not valid. While it may be more challenging to make money when the market is falling, it is still possible to do so by short selling or using other strategies.
You need a lot of money to start FX trading
It is not necessarily true. Most brokers allow you to open an account with a small amount of money. However, keep in mind that you will need enough money to cover your margin requirements and pay any fees associated with your trades.
