Forex Day Trading - The Most Important Fact You Need to Know

Forex Day Trading - The Most Important Fact You Need to Know

by kelly Price

If you are considering forex day trading, there is one fact you need to know above all others and its enclosed in this article.

The fact is that if you try it the odds are you will lose your money and lose it quickly.

Why?

Because all volatility within such a short space as a day is random and support and resistance levels are meaningless and you will may as well flip a coin. Of course if you think about it its obvious why:

You have millions of traders trading trillions of dollars each day and this mass of people and what they do cannot be measured in such a short time span as a day or less.

You will see a lot of day trading systems on the net and they all claim to make money - but there is a problem - none of them do, because none of them have been traded.

They all produce a track record in hindsight knowing the closing prices!

Well that's hard - if we all knew tomorrows price today we would all be rich but forex trading is not that simple. Whenever you see a day trading or forex scalping system with a track record look at the disclaimer and you will normally see the one below or a similar one:

"cftc rule 4.41 - hypothetical or simulated performance results have certain limitations. unlike an actual performance record, simulated results do not represent actual trading. Also, since the trades have not been executed, the results may have under-or-over compensated for the impact, if any, of certain market factors, such as lack of liquidity. Simulated trading programs in general are also subject to the fact that they are designed with the benefit of hindsight. No representation is being made that any account will or is likely to achieve profit or losses similar to those shown".

Of course if you put this disclaimer on you can say anything you like and many vendors do. They know the system wont make money (that's why they have the good sense to not trade it themselves) better to sell it and make a guaranteed income by appealing to naive and greedy investors.

Day trading is a good story but that's all it is and it doesn't work in practice. I quite like Harry Potter as a story but I don't think I can fly!

If you want to make money in forex trading understand one key point:

You need to use data that allows you to calculate the odds and that means swing trading or long term trend following - where the data can be used to help you time your trading signal and enjoy long term currency trading success.

If you want to day trade the odds are not on your side and you will lose and if you don't believe me try and find a day trading system with a track record audited of trades and profit and loss and you simply won't get one

Can Forex Trading Ever Be Stress-Free?

Can Forex Trading Ever Be Stress-Free?

by James Woolley

As rewarding and as profitable as forex trading may be, there's no denying that trading forex for a living can be extremely stressful. It can really get your heart racing at times, particularly if it's your own money at stake, but nevertheless there are ways in which you can reduce your stress levels, as I'm about to discuss.

One way of doing so is to devise a form of trading which is automated to an extent and eliminates the need for you to make trading decisions yourself. A classic example would be a breakout system where your main job is to identify tight trading ranges. Then you just need to wait until the price moves outside of this range and trade in this direction, hoping it's the start of a solid breakout and the price will subsequently move away from this range.

Breakout systems are very popular amongst forex traders and are definitely one way which you can trade without too much stress.

Another way of reducing your stress levels when trading forex markets is to stop scalping and placing very short-term trades as this form of trading is arguably the most stressful. Yes you can make big profits within just a few minutes but you can just as easily lose a lot of money as well, particularly when you get spikes in price which immediately takes out your stop loss. So scalping is definitely not for the faint-hearted.

Instead you should focus on longer term trading where you can take your time making trading decisions and have plenty of time to watch the markets and move your stop losses and limit prices as required.

Long term trading also enables you to test the idea of trading for a living whilst still keeping your present job. There's nothing more stressful than trading knowing that your entire income depends on you making consistent profits, so by taking a longer term view you can trade knowing you have your main job, and therefore another regular income coming in, which reduces stress levels dramatically.

The final method you can use to eliminate stress (which is obviously not for everyone due to the high cost involved) is to devise your own trading robot which places trades for you, depending on certain criteria being met. This is very complex and definitely beyond most people but is one other option you could consider.

Anyway the main point to remember is that although forex trading can be a highly stressful profession, there are ways in which you can make regular profits without consistently being on the edge all the time, and at risk of having a heart attack.