80% of beginner traders give up within their first two years.
Know why? Because there's too much misinformation out there.
But don't worry. I'm going to expose the myths.
That should help you avoid the common, and costly, trading traps.
Myth 1: Trading is easy
Let me set the record straight once and for all: trading is very difficult.
There's a reason so many people quit in the first two years.
Knowing how to spot patterns on a chart isn't enough to make money. It's only a tiny part of a chart-based trading strategy.
But we live in a time when social media influencers have every reason to make you believe otherwise.
Well, yes. If you think trading is complicated, you won't be keeping their business going...
Start with the assumption that trading isn't easy. At least you won't be surprised if you aren't profitable after a year.
Myth 2: Trading will make you rich quickly
This is the lie I find most damaging.
Because it's what gets beginners excited, but it's also what makes so many of them quit.
A lot of people start for the wrong reasons. They think they'll get rich quickly.
Yep, Joe Beginner hoped trading would make him rich in 2 months. Instead, he just lost 2 months' salary...
In case you didn't know: 90% of traders aren't profitable.
I'll keep saying it: trading is a discipline in its own right, one that takes years of practice and learning to master.
It takes months, or even years, before you can hope to become profitable.
You have to work, lose money, understand what went wrong, question yourself and practise before you can hope to trade for a living.
And who knows, maybe get rich one day.
Myth 3: The miracle indicator
SPOILER: it doesn't exist.
A common mistake is looking for the "Ronaldo" of indicators.
Relying on a single indicator means ignoring the market's complexity.
Indicators are based on the past. They can't predict the future with certainty.
They're very useful for pointing you in the right direction and guiding decisions, but they aren't enough on their own.
Combining indicators can be useful when you pair them with appropriate analysis and good risk management.
Be wary of anyone promising you'll get rich quickly with indicators.
They're the one getting rich.
Myth 4: Leverage is risky
You've probably heard it everywhere: "Be careful, using leverage is incredibly dangerous!"
That isn't false, but it needs some nuance.
The risk associated with leverage mainly depends on how you use it. Higher leverage doesn't mean higher risk if your money management is appropriate.
For example, a trader using 100:1 leverage but committing only 1% of their capital takes less risk than a trader using 10:1 leverage and committing 10% of their capital.
With €1,000 in capital:
- In the first case, the trader using 100:1 leverage risks losing €10
- In the second case, the trader using 10:1 leverage risks losing €100
The key is to use leverage intelligently.
Myth 5: Risk-reward guarantees profit
The risk-reward ratio (RR) compares the risk you take with the potential reward.
For example, an RR of 1:3 means risking 1 to make 3.
In theory, this lets you stay profitable even if fewer than 50% of your trades win.
Except it's not that simple...
A high RR doesn't necessarily mean a WINNING STRATEGY.
A successful trader always looks at their average RR alongside their win rate.
Your win rate is the percentage of trades that win.
For example, if you make 100 trades in a month and 65 are winners, your win rate is 65%.
Don't be dazzled by the numbers. What matters is the combination of RR and win rate.
The image below makes this easier to understand:
For example, with an RR of 1, supposedly bad according to social media, you can still be profitable with a 60% win rate.
Myth 6: Getting rich through copy trading
In theory, it sounds brilliant: copy an experienced trader's trades and, just like that, you're rich!
Well, no...
In 10 years of trading, I've never seen anyone get rich through copy trading.
Actually, sorry, I have...
I've only seen the influencers offering copy trading get rich, not the people copying their trades.
I've written an article about copy trading where I call out the bad practices involved. Go and read it.
Myth 7: Getting rich with trading bots
The ultimate get-rich idea that sounds better than it is.
In theory, a trading bot is supposed to trade intelligently on your behalf.
It's supposed to make you lots of money. You set it up, go on holiday and come back a millionaire.
Except...
It doesn't work like that. Markets adapt. A bot that works today can be completely lost tomorrow.
A bot blindly follows the rules it's given. It can't adapt to the unexpected the way a human can.
And financial markets throw up plenty of surprises...
A bot needs very regular updates to stay effective.
As with copy trading, it's mainly the people creating the bots who get rich, not the users.
My advice? Learn to trade for yourself.
