「KOL Analysis-Nazri Nas」5 MOST ENDURING "MYTHS" OR FALSE BELIEVE ABOUT FOREX

The major problem faced by many novices is that they are always bombarded with “myths” or fallacies in forex trading. They tend to put aside either the right or wrong steps to trade. Rather, to do some research about it.

Indeed, forex trading is a platform of investment. Trading without a proper knowledge and information will eventually expose themselves to risk of huge loss. Thus, only with a right knowledge and information will increase their opportunity to get a huge profit while trading with forex.

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These misunderstanding are dangerous for new traders. It will cause a detrimental effect on their trade as the forex market is a high risk marketplace. The following are my 5 lists of “myths” or misconceptions about forex trading:

#1

THE STARTUP INVESTMENT SHOULD BE HIGHERTOATTAIN HIGHERPROFIT.

Yes, I admit that this fact is totally correct and undeniable. The greater the investment, the greater the profit. But, please bear in mind if the big investment is poorly managed, this can lead to a major loss too.

As we can see today, many brokers nowadays allow activation of a trading account that cost for only USD50. With high leverage options, your capital per lot will be lower.

For example, if you use 1: 400 leverage, the capital for 1 small size is only cost at USD 2.5. It's still safe because you only use 5% of your entire capital. Isnt this amazing？ Nevertheless, if you want to get better, for this high leverage, use a maximum money management (MM) of 3%.

Start with low investment is advisable. Learn to minimize mistakes and maximize efficiency in this trading.

In the meantime, traders should also focus on increasing the size of account “organically”.

When they are used to manage small accounts to a large extent, they will eventually get mature enough to manage bigger investment in future.

#2

ALWAYS BE IN FRONT OF YOUR LAPTOP ORPHONE

Believe it or not, this is not necessarily for forex traders. You may focus on your work or do other activities and spend some quality time with your beloved family. If we understand how to make profit in this forex trading, we will only pay attention at certain times. Forex trading does not own all of your time.

After all, if you trade at the wrong time, you are vulnerable to the risk of loss. Usually, during an active time zone, it is easy for us to make a profit because there is a reaction to the actual trading of stock markets in major international markets involving USA, UK, Japan & Australia. As we know, they are the most influential broker entire the world!

Outside of the active time zone, markets are often unresponsive and most if the large movements are often influenced by speculation.

So, please focus at this time only: 3:00 pm to 7:00 pm

8:00 pm to 12:00 pm

Hence, trade will be easier when they focus at the best and right times to trade.

#3

MUST BE MATHEMATICS AND ACOUNTINGLITERATE

The world is getting more sophisticated year by year. Nowadays, everyone needs things to be solve so quickly. Almost all applications or software for trading are “user friendly”.

Profit, money management, risk management, all are provided in one application. No need to worry about calculating or anything else.

Everything will be appeared on your graph screen.

#4

PROFICIENT AT ECONOMYNEWS

If we want to trade in a large scale, only then we should be proficient in studying the stock news as well as become an economically literate.

Proficient in economy is a great advantage. However, if we were just a retail trader, we wouldn't have to be proficient about the news and economy.

The graph in MT4 captures the movement of graphs that are relative to time. As a result, the combination of these two information will explain the “behavior” and what their actions are at a specific time and specific price position.

We can evaluate the actions of investors by observing graph movements. The graph which moves extremely slow indicates the behavior of large investors who were less active at that particular time. This inactive investor's attitude portrays that there will be economic news which led to a huge impact on the market afterwards.

Therefore, it is not necessarily to be literate in economy or to be an economist for us to trade. Enough for us to observe all the investor behaviors through graph movement.

#5

THE HIGH THE LEVERAGE, THE GRETARE BIG ANDMORELOTS CAN BEOPENED

Leverage is a financial convenience in the form of capital given by brokers to traders. Leverage is also a determinant of the percentage of “money management” (MM) for each trade. The percentage of MM used by most traders is 10%.

But, many do not realize that 10% MM percentage is not suitable for all types of leverage. For example, let's say there are 2 traders. Name it Trader A and Trader B.

Trader A uses a 1:50leverage.

Trader B uses 1: 500leverage.

Let's say both trade accounts are 1 pip = 10¢Trader A per lot capital: USD20

Trader B per lot capital: USD2

If both of them have same capital of USD 200 and use the same MM of 10%:

Trader A can open 1lot. Trader B can open 10lots.

Here, we can understand that both of the traders share the same MM & CAPITAL but at different RISK different. So, “money management” percentage cannot be equal for all traders with different amount of capital.

Different leverage will require different MM percentage.

Lastly, I hope that you learned and acquired many things from this sharing. Make sure you share this article so that this precious knowledge will spread to others who in need.

NazriNas

Forex Trader & Trainer Kuala Lumpur, Malaysia

[About Author]

Nazri Naz

Trader, Author and Trainer TRADERS STUDIO KL

11 years of experience in Forex Trading as a full time trader (2007-2018); 10 years of experience in conducting Forex education and training program (2008-2018); Founder of Traders Mentor Training Studio in Kuala Lumpur (since 2008); Overseas training experience: Singapore, Brunei, Qatar and Manchester (the UK)

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