A huge number of traders try day trading strategies but which are the best to lead you to currency trading success? Let's find out ...
The aim of any Forex day trading strategy is to make small regular profits and use tight stops, to build a long term income. Day traders think that this restricts risk and increases long term profit potential but is this logic correct?
Ask yourself a question:
Any currency price is made up of the views of millions and millions of traders, these traders all have different opinions, skills, trading systems, motivations for trading and are all influenced to their emotions. So how can you work out what this vast mass of people, will do to price in minutes or hours? - The answer is you can't and day traders always lose money long term.
It's a fact that all volatility in these short time frames is random and support and resistance levels in daily ranges are not valid so you can't use them. If volatility is random, you're going to lose no matter how well thought out your system is.
In days gone by, floor traders and professionals had an advantage, because they had news first and could win at day trading. Today the internet gives everyone up to date information, at the click of a mouse and this advantage has gone.
There are lots of vendors selling day trading systems and they all claim you can win with them but they never produce a track record of real gains to support their claims. All they do to make profitable track records is run simulations over past data, knowing the closing prices and that's easy, trading without knowing the closing prices is the hard part of Forex trading!
If you want to win at Forex trading, don't day trade, look at longer term time frames where you can get the odds on your side and win.
Monday, April 6, 2009
Wednesday, March 25, 2009
Just What are the benefits of forex trading?
There are many benefits of forex trading when compared to other financial markets. One of the major advantages over all other markets is the low margin requirements.
Some modern retail brokers offer traders leverage of a whopping 500:1. This is a margin requirement of just 0.2%. This may sound very enticing when we think that we can open a $1,000,000 position for just $2,000. However, it is important to remember that leverage can work with you as well as against you. Leverage can amplify your trading gains as well as your losses.
Another huge benefit of the forex market is the fact that it is open 24 hours a day. Just as one financial center closes, another opens. More information about the trading times of different financial centers can be found on our trading hours page.
The Forex market is the most liquid of all the financial markets. The main of this is the fact it can result in some very low spreads (the difference between the buy and sell price), especially on the major currency pairs. For example I have seen spreads of lower than 1 pip on EUR/USD.
Due to the high liquidity of the forex marketplace, it makes it possible to trade a very wide range of forex trading strategies. Some of these include scalping strategies, news spike strategies, swing trading strategies, pseudo hedge type strategies, carry trade strategies and many more.
Another benefit of the currency market is the fact that as it trades currencies, and currencies all have a base interest rate, it opens the opportunity to buy a currency with a high interest rate, whilst selling a currency with a low interest rate. This enables the trader to profit from the difference in the interest rates. This is known as the carry trade.
In conclusion, the forex market has many advantages over the other financial markets and there is great potential to earn excellent returns on your investment. However, it is very important to remember that whilst leverage can improve your trading gains, it can also increase your trading losses.
Some modern retail brokers offer traders leverage of a whopping 500:1. This is a margin requirement of just 0.2%. This may sound very enticing when we think that we can open a $1,000,000 position for just $2,000. However, it is important to remember that leverage can work with you as well as against you. Leverage can amplify your trading gains as well as your losses.
Another huge benefit of the forex market is the fact that it is open 24 hours a day. Just as one financial center closes, another opens. More information about the trading times of different financial centers can be found on our trading hours page.
The Forex market is the most liquid of all the financial markets. The main of this is the fact it can result in some very low spreads (the difference between the buy and sell price), especially on the major currency pairs. For example I have seen spreads of lower than 1 pip on EUR/USD.
Due to the high liquidity of the forex marketplace, it makes it possible to trade a very wide range of forex trading strategies. Some of these include scalping strategies, news spike strategies, swing trading strategies, pseudo hedge type strategies, carry trade strategies and many more.
Another benefit of the currency market is the fact that as it trades currencies, and currencies all have a base interest rate, it opens the opportunity to buy a currency with a high interest rate, whilst selling a currency with a low interest rate. This enables the trader to profit from the difference in the interest rates. This is known as the carry trade.
In conclusion, the forex market has many advantages over the other financial markets and there is great potential to earn excellent returns on your investment. However, it is very important to remember that whilst leverage can improve your trading gains, it can also increase your trading losses.
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