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FOREX Day Trading - Day Trading Doesn't Work So Don't Try It

The logic of day trading is totally flawed and will never make you money over the longer term and will wipe out your equity.

If you want to prove it ask anyone who says it does to give you a real time track record of profits and you won?t get one.

Why? Because day trading does not make money.

Before we begin, you may ask yourself why there are so many people claiming they make money at day trading?

Well the answer is it?s a good story and appeals to peoples greed.

This creates system sales and revenue for the vendor OF these day trading methods so they make money you lose.

Here are the reasons day trading does not work:

1. Time Period

A day is to short a time period to judge market trends accurately.

Think about it.

Trillions of dollars are traded everyday and prices can go anywhere and there is no way of guessing what the volatility in a day will be or the direction.

Short term moves are simply random.

You could probably flip a coin and do as well as most day traders.

2. Stops

Day traders use the daily range to buy and sell and set stops.

Stops therefore tend to be close to entry by the very nature of day trading.

Volatility in a single session is impossible to judge and most times simply picks off the stops and creates small losses which add up.

3. Banking profits early

Most day traders are looking to scalp a few pips here and there.

They do have some wining trades (more by luck than by judgment) but of course they break the fundamental rule of trading leveraged investments which is:

Run your profits to cover your inevitable losses.

As they have a lot of losses and marginal profits the net result is the erosion and eventual wipe out of account equity.

Day Trading is a good story, but in reality day trading doesn?t work over the long term.

Simply ask any vendor who sells a day trading system for this:

A real time track record of their profits over 3 years and see the answer you get.

The conclusion from all of this?

You guessed it ? Avoid day trading if you don?t want to lose your money.

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Currency Forex Trading System-Opportunity For Swing Trading When Currencies Move Up or Down

Generally, when we trade forex, we can either trade the short term fast moves that characterise the volatility inherent in currencies, or we can trade the longer term swings.

Since our aim is to have a consistent income, there is a need to have a systematic way to trade forex so that we can glean our profits consistently and systematically.

If we look at trading systems today, we find that many forex traders day-trade and these day traders have their own favorite day trading systems. Another way to describe these traders is scalping. Indeed, many forex traders are able to make a living by scalping the markets, working a few hours a day from home.

If we look a bit deeper into what makes scalping possible, then we can discover that prices of a currency do have this characteristic of moving from a low point position to an upper point position, to form a trading range in a daily fashion. As long as prices oscillate within this range, the forex trader can actually scalp and make profits from buying at the low point and selling at the high point.

What is most interesting is that beyond the boundaries of the lower point and the upper point, the currency no longer displays its tendency to oscillate, but break out into a trend. If the price drops below the lower point position, it goes into a downtrend. If it goes above the upper point position, it goes into uptrend. It is no longer under a trading range where the forex trader scalps or actually is range-trading.

It is times like these when the projected lower points positions and the upper point positions are breached and confirmed that trends are apparent, and swing trading comes into play.

For example, the US-Yen currency pair has been in a prolonged downtrend where selling positions could be taken over a period of 8 years to profit from the down swing. Day trading is no longer the focus.

Recognising when the currency pair has moved out of its trading range and has broken out into a confirmed trend is the key to swing trading.

Is the chart displaying a bottoming pattern configuration, with higher bottoms, and higher highs? Is there a double bottom or triple bottoms pattern, a V formation or a W formation in the chart pattern?

Is there slowing downwards price momentum? From the aspects of japanese candlestick, are there short term bottoming patterns such as a hammer, a tweezer bottom, a rising star, a piercing line or a bullish engulfing pattern to lend credence to your initial suspicions of a bottom and an initial upswing?

As forex traders, our objective is to be profitable whether we scalp or we swing trade. As markets trend only around 30% of the time, being able to identify the initial outbreaks of the swings and being able to trade them with our favorite swing trading systems will mean we can capture the sweetest part of the swing moves. While we range-trade 70% of the time, it is the big swing trades that can provide us with big profits. That's why we need a sound proven currency forex trading system for both range trading and swing trading if we are to profit from forex trading.

Peter Lim is a Certified Financial Planner. You can shorten the learning curve and discover 3 powerful trading systems that cover day trading, range trading and swing trading devised by a veteran professional forex trader by visiting the author's blog http://1forex-trading.blogspot.com