When someone says they're a FOREX trader, a lot of times, people will scoff at them. Personally, throughout my time working at Apiary Fund and being at Trader on the Street from the beginning, I have heard that “FOREX is a scam,” "you can’t possibly be making money,” “you can’t make a living off of that,” and so much more. This sort of thing comes with the territory. There are a lot of myths about FOREX; much more than any other trading or investment source out there. So, what are the most common myths, how did they arise, and how do we know they are myths?
For those who don’t think FOREX is a sham, a common myth amongst those who may not trade it or are looking to get started is that it's a get-rich-quick market. Now, if you're looking to get started in the FOREX markets, don’t let this dissuade you, just know you won’t be a millionaire next week. FOREX has the amazing benefit of being leveraged. A $50 account can place $1,000 trades with ease. This capability and the fact that with just $500 in an account, you can place a trade worth over $10,000 makes people think that you can triple your money in an hour. What you have to consider though is the minute changes the FOREX market makes. A pip is a fraction of a penny, so a large amount of money needs to be traded to capture that small movement and make money. With a $1000 trade, one pip makes ~ $0.1. Some markets move 40 pips an hour or more, which means with your $50, in an hour, you can profit $4. Almost a 10% in an hour; not bad, right? However, FOREX is volatile and doesn’t always do exactly what you’re thinking. It take a lot of patience and planning to trade at an extremely profitable level. Trader on the Street, for example, makes an attempt to earn the average days wage (according to the BLS) in one hour. If you've watched these episodes where Shawn Lucas trades, there have been times where it has taken two hours to just break even from losses, then have to trade into profit. While the leverage and quick movements in the FOREX market allow for quick profits, they also allow for quick losses, so don't expect to make millions right away.
Another common misconception is that FOREX is just a scam. This stems from an idea similar to the one above: quick money and quick markets. Due to many different schemes out there today, the promise of quick money is looked at never possible. As said above, it takes a long time to become a great in the FOREX market, but some people can do it pretty quick. These people's stories about making $1,000 a day make many others immediately skeptical and question the validity of the whole market. One way many companies in FOREX will try and circumvent this idea is with trials of services. Many education companies get a bad rap from people who have never even tried them just because they trade FOREX. It's always a good idea to try a company that offers a trial and to make sure that they're registered with a regulatory body. For FOREX, the Commodities and Futures Trading Commission (CFTC) and National Futures Association (NFA) are the two primary bodies that track the validity of a company. Make sure the organization is registered with these and there are no complaints filed against them and you should be good.
Most of the FOREX myths boil down to those two points. There are many people who will talk bad about anything and just as many who will counter and back up anything. Make sure you're comfortable with what you're doing, though. Similar to the 'Questions to Ask a Broker' article here, if you have concerns with whom you're working with or how they operate, ask questions. Knowing what happens when you start trading or working with a company like Apiary Fund can really change how things go. By asking those questions, you can make sure you’re getting started into what you want to and not a different type of program. This will help you know what’s going on and help to not create a stronger bias due to myths you’ve heard.