Forex Day Trading - Why Day Traders NEVER Win Long Term by kelly price

If you are new to Forex trading you may consider day trading but beware of the fact that day traders ALWAYS lose for the following reason:

All short-term price volatility is random

There are countless millions of traders each day that trade trillions of dollars worth of currency and to say that you can measure what they will do in a few hours or a day is the biggest myth of currency trading.

THE PROOF

You may say that you have seen forex trading systems that claim profits and what they do is claim and NEVER produce a real track record.

You normally get the following:

1. Outrageous Claims

Advertising copy pure and simple, with no substantiation - designed to appeal to the greed and naivety of the buyer.

2. A Hypothetical Track Record

Let me explain what this is, for those of you who don't know:

It's a hypothetical track record done in hindsight KNOWING the closing prices! How hard is that?

Anyone can do it and there not worth the paper they're written on. The fact so many traders don't question them or don't ask for a real track record, means they lose and wonder why.

Anyone can make money knowing the closing prices but in Forex Trading you don't get that luxury - its what makes forex trading so hard.

The reason you don't get a real time day trading track record is simple - day trading DOESN'T work.

If it did you would see a day trader with a real track record but of course if you try and find one you're in for a long search.

Day Traders don't make money - PERIOD.

If you want to make money with forex technical analysis you need to trade in time frames where the data can help you get the odds on your side and this means normally data of a few weeks minimum, not a few hours.

Think about it - if you have random volatility that can and do take prices anywhere in a day, its impossible to apply any technical tools to it. The tools maybe good but the data is unreliable and that's why day traders lose.

The proof is a real time track record and you wont get one in day trading - try asking one of the vendors who try and sell day trading systems for one and get ready for a long search.

Day trading does not work and never has and it's one of the biggest myths of trading that forex traders fall for - dont fall into the trap or you will lose to.

About the Author

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Trading Forex- overtrading. by Mike P. Kulej

Entire libraries have been written and published on a subject of trading mistakes. Just about every trader with some experience has his own list of pitfalls. They can vary from under capitalization to over leveraging to lack of general market education. While the list can be very long, few mistakes make the list on consistent bases. One of them is overtrading.

It is easy to say that, but when exactly does overtrading happen and how do we define it? More importantly how do we recognize it and prevent it from happening? Not one simple answer will be applicable to all traders, as it can only be determined in light of persons' trading style.

Perhaps the easiest type of overtrading to recognize happens to traders who use clearly define systematic approach. In other words mechanical trading systems. If you are using software generated signals to trade or some other form of auto trading and you start taking more and more trades outside of your system, you are probably ovetrading. This happens usually during period of time when the system is under performing. Since all systems go through weak periods, it might easily happen to everybody. Good news is, this is easy to notice and correct.

More difficult to pinpoint is overtrading happening to discretionary traders. Those who do not use mechanical systems are generally speaking trading in a discretionary manner. However, even here traders follow some strategy. These could be price breakouts, reversals, times of day or many, many other possible set ups that trigger a trade. It's good to look at a number of trades say from week to week, analyze both entry and exit points and, of course, results. If you take more and more trades, with slipping results, you might be overtrading. Traders often tell themselves they are "optimizing" their strategy, or employing new method. If that's the case, you can always open additional account to trade another approach. That should make it easier to notice any problems, like nonperforming system, not following your rules or overtrading.

Day traders who start leaving position open overnight or find themselves sitting in from of computer longer and longer, are almost certainly overtrading. Just because Forex can be traded 24 hour, doesn't mean it should be. Determine the time of the day most suitable to your lifestyle or fitting your trading strategy and stick to it. Around the clock trading availability is not a trading necessity.

Trading too many markets at once. There really is no need for an individual trader to have an open position in 15-20 pairs at the same time. First of all, this uses up available margin collateral very quickly. That can easily lead to a margin based liquidation if enough positions turn against you. Also, this kind of "dart board" approach implies that trader analyzed all those crosses and has a well developed strategy for all. In most cases it very unlikely.

Yet another form of overtrading is always having an open position. This suggests, that trade opportunity is ever-present and one always knows what it is. That is simply not possible, furthermore it exposes trader to a constant market risk. Trader who is always in the market is very likely not pursuing well defined trading plan.

Overtrading ranks as one of the most common trading pitfalls. Thankfully, it's also the one that is most easily avoided. Unlike intrinsic market risk, this one can be controlled by an individual. Periodical review of trades can show if you are trading more than your trading plan calls for.

About the Author

Mike Kulej is a Chief Forex Strategist for Spectrum Forex LLC., and a creator of highly effective "Rainbow" trading system. He specializes in mechanical trading systems as explained on www.spectrumforex.com. Spectrum Forex LLC offers numerous services to individual traders. With questions and comments e-mail him at kulej@spectrumforex.com.