Day Trading Talk

Tarkovsky asked:

FOREX day trading is more popular than ever and online you can get a huge amount of e-books and FOREX day trading systems, which promise you regular income and huge capital gains.

Here we will look at how to separate out the myth and see the reality in relation to day trading and how to win in the markets.

Myth – Day Traders Have Profitable Real Time Track Records

Reality

FOREX day traders don’t make money and the proof is that of all the e-books and systems for sale, you never see a real track record of real profits made in the market over the longer term.

What you do get is a hypothetical track record, but these are not worth the paper their written on.

Why?

Quite simply because their devised in hindsight – knowing the closing prices.

Well, if we all knew tomorrow’s prices today we would all be millionaires!

Hypothetical track records are simply made up and have no bearing on how successful you will be trading the system.

Myth – Day traders trade their own systems

Reality

Most FOREX day trading systems are sold by failed brokers, or marketing people who have the sense not to trade the system themselves.

They don’t need to, as they make money anyway.

They can simply rely on writing some marketing copy to appeal to the greed of investors, then sell them the system.

They get their fee and the FOREX trader gets the loses – fair deal for them!

Myth – You can predict short term volatility

Reality

This is of course why day trading does not work.

Trillions of dollars are traded each day by millions of participants and to say you can predict where prices will go in a matter of hours is laughable.

The only people who take notice of support and resistance are losing day traders.

Volatility can and does, take prices anywhere in a day and levels of resistance and support are constantly broken handing day traders loses.

Myth – Day trading restricts losses and runs profits

Reality

As day traders work with meaningless data they can’t win of course but many think that day trading restricts risk, but it actually creates it.

Losses are small, as they are near daily support or resistance ( which get broken frequently as the data is meaningless) which simply ensures they get stopped out with a loss albeit a small one.

Running profits?

Forget this with day trading!

They are looking to scalp a few ticks or close positions out quickly.

The result is they can never run profits to cover the huge amount of small losses they get.

The biggest myth of currency trading is that day traders make money they don’t.

They lose and system sellers laugh all the way to the bank.

The proof of the above is:

If you ever ask a day trader for a long term track record of real profits – Try it and see if you get one.

If you want FOREX education avoid day trading and learn FOREX Trading methods that actually give you a chance of winning.

Day trading is simply one of the best ways to lose your money in online FOREX trading, so don’t fall for the myth understand the reality.

ARDEN Roger

Sacha Tarkovsky asked:


Day trading systems and methods are one of the most popular ways to trade Forex.

Let’s look at a common mistake in relation to day trading that you need to avoid to make money.

Here is the most common day trading mistake.

Believing the logic works

It amazes me people do not see that the odds are against you when you day trade as the logic it is based upon is simply not true.

The biggest mistake of all is that people think they can make money longer term day trading forex.

So why can’t you win?

Its common sense really – the data is unreliable and cannot be used.

Think about this:

Trillions of dollars are traded daily by millions of traders all with different investment objectives and levels of skill.

Very few pay any attention to daily volatility (it’s obviously random) and daily ranges which simply are not relevant – volatility in daily session goes wherever it wants.

Most traders accept this fact but not day traders they believe there is order in hourly or daily frames and of course there is not.

No indicators work in short time spans

Day traders of course use pivot points and support and resistance to enter trades and place stops and wonder why they continually get stopped out.

Day Trading breaks one of the fundamental rules of investment

Which is of course run profits and cut losses quickly

Of course day traders cut losses quickly and keep them small and they of course have a lot of them!

Day traders though can’t run profits. This is alien to day trading, they are happy to scalp a few points and get any profit they can but of course these can never cover the huge amount of small losses they generate.

The result of relying on unreliable data is a lot of small losses and a few small profits which sees them wiped out over time.

TRY THIS TEST

Find a day trader who can give you a real time track record of profits made in the market over the longer term say 2 or 3 years and you won’t get one.

There are many vendors selling day trading systems and they make money from selling their method to you and are not foolish enough to trade it themselves.

They produce hypothetical track records that are done in hindsight.

That’s not hard when you know the closing prices anyone can make money!

The real proof is making money and the fact is day trading is not a way to do this and ask for a real track record and you wont get one.

Get the odds in your favor

The biggest mistake in relation to day trading is to believe that it works – it doesn’t and there are far better ways of making money where you can put the odds in your favor.



Tom

Kelly Price asked:


Having been a forex trader for 25 years it amuses me when I see writers defend day trading. They say it really can make money! – Of course they have no track record to back it up just empty words. Fact is you are guaranteed to lose in day trading for one simple reason:

All Movements in Short Time Frames Are Random

Trillions of dollars trade hands each day and million of trader’s trade, all with different objectives and opinions and to say that you can predict what they do in a few hours or a day, is ridiculous. You can’t.

Volatility takes prices anywhere in a day and support and resistance levels are meaningless, so you would have the same success rate flipping a coin.

It’s absolutely impossible to get the odds on your side – PERIOD

This is of course why you NEVER see any of the vendors selling these systems give you a real time track record – Why?

Because they don’t dare trade it!

They would rather write some enticing copy and appeal to the greed and naivety of traders and make their money selling you the system – they win you lose – period.

But I have seen a track record you may say and yes will have, but it’s NOT real.

If you check the disclaimer on it you will see there all hypothetical!

What does that mean?

It means done in hindsight knowing the closing prices!

Now who can’t do that it’s not exactly hard.

If we all knew tomorrows price today we would all be millionaires but we don’t – and neither do we know what will happen tomorrow, so there not worth the paper their written on.

Day trading is a good story but the logic doesn’t add up and the biggest lie about day trading is you can make money at it longer term.

If you could you would see a track record or the vendor would shut up and trade it himself and not need your few hundred dollars.

If you want to win

Appreciate that trading is an odds game and to trade the odds you need to trade over longer periods ,where the data is valid and you can have a chance of getting the odds on your side.

Finally

Don’t day trade, get real and trade with the odds on your side.



Terry

Jim Pretin asked:


Day trading is the practice of buying and then selling a stock all within a single day of market activity. Day traders dabble in a number of different financial instruments, such as stocks, currencies, stock options, and futures contracts such as interest rate futures, equity index futures, and commodities futures.

It is not uncommon for a day trader to execute hundreds of trades in a single day, whereas others might only make a few trades. Some look for swings in prices that may last a few seconds or a few minutes. Such a trader literally will buy a stock and then sell it within a few minutes, or sometimes within 30 seconds or less.

Others look for changes in momentum and will hop in at the beginning of an upswing and then ride it out until the upswing is over. This is known as momentum trading. Another strategy that day traders often employ is called position trading, where they look for a stock that is likely to experience a significant increase in price over a period of a few days or even a few months. They hold their position until the price plateaus, and then they dump it.

Most average day traders look at the resistance and support levels for the price of a given stock. When a stock has reached its historical maximum, it is said to have reached its normal resistance level, meaning it probably will not go up much more. When the stock has reached its historical minimum, it is said to have reached its support level, meaning it will probably not go down much further. However, new resistance and support levels are established all the time, so it is not always smart to rely on historical price levels to gauge future price movements.

Most traders look at websites like MarketWire for the latest breaking news developments to make their investment decisions. If a company has just put out a favorable press release, the price of the stock will likely go up in the short-term, so it is smart to buy some stock as soon as the story is released, and then sell it when the buying frenzy starts to lose its momentum.

One of the most common practices utilized by day traders is known as buying on margin. When you buy a stock on margin, you are basically borrowing money in order to buy stock, and of course the money that you borrow has to be paid back at a certain time. Most brokerages usually require that you have a certain minimum amount in your account in order to borrow.

Some financial institutions require that you have an account balance equal to 25% of the amount you are going to trade on margin, and some require 50% of the amount borrowed. And usually, the trader is required to exit a certain percentage of the positions they have in various stocks by the close of business on the day when the trades were initially executed. Buying on margin is extremely risky, because the money you lose on trades is still owed the lender. Margin orders are not recommended for inexperienced investors.

Another popular trading strategy is called short selling. This is where the trader borrows a stock from a financial institution and then sells it, hoping that the price will go down in the near future so that the trader can buy the stock back at a lower price when it comes time to return the stock to the lender. The difference between the price it was initially sold at and the cost to buy it back in order to return it to the lender represents the profit for that trader. Short selling requires advanced knowledge of market trends.

After a stock is bought and subsequently sold, there is a settlement period that must elapse before the money earned from the sale can be used again to place another trade. The settlement period is usually 3 full business days. This can be especially frustrating for neophyte day traders who have opened up their first brokerage account and then put all of their money into one stock, and then sell it the same day when it goes up, only to discover that they have to wait until the transaction is settled in 3 business days before they can place another order.

So, if you are new to trading, do not use all of your money to place a single trade; set aside some money so that you always have some money in your account that is not tied up in settlement, so that you can continuously trade without interruption.

I hope this information has helped you to become familiar with day trading. Try to set aside some money for investing and start while you are still young. The earlier you begin, the more money you can potentially make down the road. Some day traders make millions, others lose everything, so you should carefully research the companies you are going to invest in beforehand and you will do fine.



Howard