8 Reasons Why You Should Take the Time to Learn Forex Basics

If you still wonder why learn forex basics, take a look at traders’ mistakes. They all boil down to ignorance of basic principles and basic risk assessment.

Learn Forex Basics in More Depth

You can actually approach learning through a hand-on method, in all kinds of subjects. Not just forex trading. In fact, learning becomes powerful and meaningful when the problems and challenges of life are presented first. The principles and ideas constituting the solutions should come second. Because if one fails to understand the usefulness of a theory. Then they are no longer motivated to learn a great deal about either the problem itself, or the possible solutions. Problem solving is interesting when one faces the problem, and then turns to theory. In the case of forex trading, some typical problems are risk assessment and management. Dealing with open losing trades. Identifying false market moves. And even recovering trading accounts that have been blown by more than 70%. All these problems look impossible to tackle, but actually aren’t. As the forex trading business opportunity appeals to to more and more people, the brokerage industry wants to make things easier for them. By not presenting too much complication. And by facilitating efficient, fool-proof trading. However, you can do better than the majority of these traders, by ignoring classic trading advice. And by solving those big problems of forex trading. That’s what will ultimately minimize risk and trading losses. And when most of the risk is removed, what will eventually remain will be a very profitable trading system.

Learn Forex Basics from Anyone Who Can Explain Clearly Enough

You can learn forex basics from all kinds of sources which explain principles well enough. Basic definitions such as pip size, leverage, and volatility. As for the problems themselves, and defeating market risk, you should not take much advice from anyone claiming to be a professional. Strangely enough, all educators claiming to be professionals actually provide generic risk management advice. And this advice fails to solve those key problems in real trading. Educational sites and resources are filled with all kinds of tired old tips, which are total nonsense. Tips such as…cut loses short and let profits run, or never add to a losing trade… These are all nonsensical trading tips, that are simply made to make you feel good. And of course they are useless. But here’s why:

1. Classic investing risk-reward ratio contradicts small risk-reward ratio proponents in forex trading.
2. Carry trading basics contradict those who claim that risk cannot be hedged.
3. Probability analysis contradicts believers of random markets.
4. Market charts contradict the tip of never adding to a losing trade.
5. Market charts contradict the naive definition of support and resistance.
6. Basic price analysis contradicts proponents of disciplined trading.
7. Volatility contradicts most of the claims of proponents of news-based trading systems
8. Volatility contradicts the concept of let profits run, how do you define an open trade as profitable?

Critical Thinking is Required

By applying all this critical thinking and challenging established opinion. You will see more of the truth. The forex market and its problems cannot be handled through naive tips and nonsense. The very basic principles of forex clearly indicate that classic trading theory cannot deliver on its promises. Whether you are a slow trader or day trading forex live, these basic definitions will help you sharpen your judgment and apply critical thinking to your trading. It’s odd, but all those who claim to be professionals and experts are actually providing nonsensical trading tips. The most ridiculous of which is often their definition of support and resistance. It’s so ridiculous, that it makes these so called professionals look right, no matter what the market does. Because if the market rallies it fits their naive resistance theory. And of the market falls, it does so because it breaks below their naive support level. How convenient is that. In today’s markets, many new traders are enticed to start trading based on such ridiculous tips. And thanks to various, reputable, CFD, forex brokers minimum deposit, it’s very affordable too. The problem is that lack of critical thinking on the part of the traders. Due to lack of knowledge of the basics. Eventually leads to frustration and the inability to trade even in the easiest market conditions. So do learn forex basics, and apply critical thinking. No matter who the expert giving you advice is!