Fundamentally, Forex trading is similar to changing currency when you travel abroad. You buy one currency and sell the other at the best rate you can find.

The foreign exchange market is a popular global market with more than $6 trillion per day being traded globally. Yet, out of all these forex traders, only a handful succeed. Those who do may go on to share their tips and tricks. But how do you know what to believe?

Regardless of previous experience, it can be hard to tell apart fact from fiction. When you are dealing with large amounts of money, keeping yourself well-informed is essential.

Read on to see the five common myths about Forex trading which we have debunked for you.

Myth #1: Forex Trading is Easy

Many new traders believe that Forex trading is easy, but that is far from reality. You might be under the impression that money comes in as soon as you open and fund your live trading account.

However, there are always risks involved. Even with accurate exchange rate predictions, volatile currency pairs can make trading difficult. Other factors can drive a currency up or down, such as major news releases, central bank announcements or geopolitical events.

Most successful traders have spent years navigating through these factors, learning from other successful traders along the way. It takes a while to develop a strategy that works.

If you are new to Forex trading, start by dedicating your time and effort to practising and developing strategies. One way is to have these strategies tested in a Forex demo account before implementing them. By doing so, you can learn how your strategies fare in a risk-free environment. Most brokers, such as Forex4you, offer a free demo trading account for beginners to train on.

Myth #2: You Need to Have a Lot of Money to Trade Forex

This myth dates back to when online Forex trading was not yet established. The Interbank Forex market used to be unavailable to retail traders. Individuals had to have a high net worth, be able to trade over US$1,000,000 and have a credit line extended to them by a financial institution.

Currently, Forex trading has been made accessible to just about anyone. All you need is a modern computer, an internet connection and money you are willing to put at risk.

Myth #3: Trading in Forex is a Gamble

Another widespread Forex untruth is the misconception that Forex trading is the same as casino gambling. Undeniably, Forex trading is unpredictable and involves putting your capital at risk. But, it has a more strategic aspect, differentiating it from pure gambling.

There are ways to improve your chances of success. Start by establishing market analysis methods with technical and fundamental analysis. You can also implement reliable money management practices. Size your positions based on your account size. This allows your profits to run and immediately cuts your losses.

You could gamble it all and blindly make bets within the Forex market as novice traders do. But, if you want to become a successful Forex trader, start by choosing to take strategic risks backed up by research and data.

Myth #4: You Need a Finance Degree to Trade Forex

Many successful practitioners need not have advanced degrees related to finance or economics.

Since Forex trading happens over the counter (OTC), there are no physical exchanges. People can easily log on to a Forex site such as Forex4you, open a trading account and start trading.

Equip yourself with knowledge of the markets and have a successful trading strategy that works for you. Then, you could potentially be better than those with a PhD in economics.

Myth #5: The Forex Market Moves Randomly

The volatile movements of the Forex market are termed by statisticians as a "random walk" (like staggering drunkenly on the sidewalk). The truth is, currency pairs' exchange rate often exhibits a steady trending behaviour that is not random at all.

The valuation of a currency pair in the Forex market reflects the relative economic strength of the two nations' currencies. If different countries implement policy changes, economic developments may differ and increase the valuation of the more favoured currency.

Currency pair trends continue to persist. This is due to market participants believing the valuation of one currency against the other moves to reflect the basic fundamentals of the two nations.

The key takeaway in trading is that these market trends are systematic. Successful Forex traders make use of these non-random trends in their technical analysis. So, start by making your trades along the prevailing market trend as it could be beneficial.

Remember, returns are never guaranteed due to the volatility of the Forex markets. Make sure you understand the risks and trade smart to rake in large profits.

Forex Trading involves significant risk to your invested capital. Please read and ensure you fully understand our Risk Disclosure.