Day Trading Talk

Sacha Tarkovsky asked:


I read a lot of material from e-book sellers and others about forex day trading and how easy it is, but these guys have probably never traded in their lives.

The fact is if you want to make money don’t day trade, you will lose your equity. Here we will look at why.

The Odds & Data

The longer and more data you have, the easier it is to calculate the odds.

Currencies represent the overall health of the economy and it’s a fact that the longer term trends last for months or years – These are the trends that make money.

Day trading is doomed to failure, as you have no reliable data to work with as the time span is to short.

If you have no data to work with then how can you day trade?

You may as well toss a coin.

Day trading sounds appealing, scalping the market, getting in and out quickly – but you won’t win.

CONSIDER THIS FACT TOO:

Let’s assume you don’t believe me and you think the data is reliable enough.

Well, how about this to consider:

To make money trading “Run Your Profits and cut your losses”

All professional traders know this is the way to make money.

You need to make sure that your profits are big enough to cover your inevitable losses.

In day trading you can cut your losses but running your profit is a contradiction in terms!

You can’t, because even if you have a winning trade you close it too soon.

This would seem common sense, but day traders don’t believe it but they should, it’s a fundamental rule of investing.

I know long term traders who win maybe 20% of the time and make huge profits.

Why?

Quite simply, their profits are far bigger than their losses, on the other hand, I have seen day traders win 50% of the time and get wiped out.

If you want a thrill then forex day trading is exciting but you will lose your money.

If you don’t mind losing money, go ahead but if it were me, I would play roulette it’s just as exciting and more fun.

Fact is those e-books and brokers peddling day trading systems normally have never traded and rely on persuasive copy and greed to sell their systems.

Normally they have their eye on the commission they can make.

Forex day trading is great for that but that won’t help you make money.

If you still don’t believe me then when you get a broker or e-bookseller who wants you to day trade ask them for the following:

A real time audited track record (minimum 3 years) net of all fees showing a profit.

Try it and see if you get one for a forex day trading system.



Valerie

Mike Singh asked:


Day trading is an extremely risky way of investing in the stock market. Day trading is carried out by day traders who rapidly purchase and sell stocks over a single day period in the hope that for the very short period over which they hold the stocks (ranging from just a few seconds to a couple of hours) the value will continue to climb or fall thus allowing day traders to secure quick profits.

The method of buying and selling stocks over a very short time period can create huge profits or losses for the day trader in just a couple of minutes or hours. Statistics show that 80-90% of all day traders make a loss at the end of each trading day. However day trading has become an increasing popular form of trading in recent years as a result of the internet and increased access to information. So while day trading used to be a marginal form of stock trading reserved for the most part to financial firms professional traders and an elite group of private investors it is now also very common method of trading among casual traders.

Day traders are defined as traders who place four or more round-trip orders over a five day time period and the total trading activity over a day is 6% or more of the total value of all shares held.

Brokerage fees for day traders can be substantially lower than fees for other types of traders. While margins for most traders are usually around 50% of the value in traders account, day traders can face levels as low as 25%. This means that a trader can by lets say, $1000 worth of stock from an account of only $250.

Tips for success

The five most common strategies adopted by day traders who seek to make are profit are

* Trend following – used by all trading firms this strategy assumes that stocks that having been rising steadily will continue to rise.

* Playing news – this strategy is to buy stock in a company which has just announced good news

* Range Trading – this is where stock that has been rising and falling is bought near the low price and sold as it hits the high price range.

* Scalping – it is commonly defined as a very quick trade.

* Covering spreads – To play the spread or the make the spread simply means to buy stock at the Bid price and sell the stock at the Ask price. The difference between the bid price and the ask price is known as the spread. Because there is an historical tendency for the stock market to rise profit can be expected for this form of trading.



Gary

Sacha Tarkovsky asked:


You will see day trading systems all over the net promising you huge gains but consider this key question before you buy one:

If the system makes such great gains, why does the vendor sell it for a few hundred dollars?

Of course, the answer is:

Because it doesn’t make money and the vendor is not stupid enough to trade it, when he can sell it to novice traders who are taken in by hyped up sales copy.

Day trading systems DONT work longer term and its one of the stupidest ways to trade online forex markets.

Don’t believe me?

Then ask any vendor selling a day trading system for a real time track record and see if you get one (let me know if you do)

What you will get is a hypothetical track record of great gains, but what use is this?

Hypothetical means it was done by the vendor knowing the closing prices, not risking real money!

Now if we al know tomorrows closing price today we would all be millionaires, but that’s not the reality of trading.

So why doesn’t day trading work?

1. Volatility in any daily or hourly period is random.

The period is to short and support and resistance levels are meaningless, so you cant trade of them – You may as well flip a coin.

So what happens?

Day traders constantly get stopped out and accumulate small losses as volatility can take prices anywhere in a daily period.

Do day traders ever win?

Occasionally they get lucky and win.

When they do they get obsessed with scalping a few points profit, or getting out at the end of the day, so they can never run profits to cover their huge amount of losses.

What happens – they get wiped out longer term.

There is no better way to lose your money than day trading!

Most day trading system vendors are:

Failed brokers, writers or salesmen and make their money from selling systems.

Of course they don’t trade themselves, as they don’t trust their systems to make money and would rather have the guaranteed income from selling the system it’s a lot less risky than trading it!

Day trading is a mugs game don’t fall for the hype look at the facts.



Melvin