Currency Trading – He Is Just Not That Into Forex Day Trading
Posted on April 1, 2009 - Filed Under Finance | Leave a Comment
To say forex day trading is not risky would be a lie because it is
definitely the riskiest form of trading in the forex market, but you
can make money if you know what you are doing and have the ability to
contain your emotions in this high paced environment. The risk and
tempo are what keep a lot of people out of this aspect of it and going
the long term way.
I once had a student Alvin who attended my forex training course and
one day, he asked me if he should go for forex day trading using the
forex scalping methods I've thought him. I told him forex day trading
may be lucrative but may not be suitable for everyone. I went on to
analyze the pros and cons of forex day trading with him.
Firstly, something that is a draw to forex day trading is the fast
trading cycle. Many traders like the rush and potentially, it could
actually be more fruitful than long term trading. Each individual trade
may not make as much as a long term trade, but because you may be
making 10 trades to every one of theirs, if not more, your
profitability can actually be higher than that of the long term forex
trader.
Another drawing characteristic of day trading is that you do not have
the overnight worries of the long term trader. Your money is out of the
market at the end of the day and if anything happens to affect the
currency of a certain country, you just roll over and go back to sleep.
The long term investor will be chewing on their nails waiting for the
market to reopen.
Of course, with any positive there are negatives that have to be
considered. The first of these is that the plain fact of the matter is
that about 4 out of every 5 people that day trade end up losing money.
There are several reasons for this. One of them we have already
mentioned in the risk factor and another is that traders are pulled in
by the lure of making very fast money and don't do the work that is
necessary to be a successful day trader.
Also, a lot of the people that are day trading are doing so on borrowed
money. They are leveraging against their forex account and they end
risking too much on one trade and then they end up in massive debt when
a trade goes bad. It is not the forex market that is causing this, it
is the trader that is not putting in the necessary work and effort to
be an effective day trader.
Another thing about forex day trading you should know is that it will
take up quite a fair bit of your time as you need to monitor the forex
market very closely. Some part time forex traders overcome this by
using automated forex trading system that trades for them.
If you're having a full time job, it can also be quite distracting.
Having heard my analysis, Alvin said he's just not that into forex day
trading as he has a full time job and he does not have the time to
monitor the forex market. Also, he said he does not need the extra
excitement as his job is already stressful enough for him.
If you are still interested in day trading and have the time, give it a
shot, but just do it conservatively. There are plenty of very
successful day traders, but they take the time to create a successful
forex day trading system that works and gives them an overall profit
day in and day out. If you find that it is too much for you , just
explore the long term aspect of this market niche as there is plenty of
money to be made!
About the author
trading system, download my FREE 56-page ebook at
http://www.forextradingpower.com now.
The author, Daniel Su, is the founder of
http://www.ForexTradingPower.com where you can get free premium forex
trading tips and resources.
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