I have traded my own account for many years, trying most styles before finding my particular niche - day trading grain futures contracts. What seemed important in those early days now seems largely irrelevant. Instead, I focus exclusively on a few powerful trading concepts. This article summarizes what is important to me now. People day trade for many reasons, two of which are especially important to me.
In a Forex day trading system, you require quite less starting capital. With Forex brokers allowing traders to open trading accounts with less than $250, the Forex day trading system is open for everyone. The main job of the day traders is to capture the intraday price swing. During each trading day in Forex day trading system the overall foreign currency trading volume is determined by the market time i.e. the times when the markets open and the times when these markets overlap with each other.
With each passing moment, the Forex currency trading volume remains high, but it goes to the peak when the European and US markets open at the same time - from 1 pm GMT to 4 pm GMT. During day trading, a day trader quickly buys a large number of foreign currencies at a time and sells it once they see that the price rises within a day.
However, it is very important for the day traders to understand how margin works in Forex day trading system, how much time they will have to meet a margin call and what is the potential for getting into it. Forex day trading system is not for everyone because it involves significant risks. You should not start day trading with money that you cannot afford to lose. Since your job is to capture various price swings during the day, and the trade opens and closes on the same day, your profit would also be less than the trade that is set to meet long-term goal.
The main disadvantage of discretionary trading is the inconsistent results this style of trading can potentially produce. Markets are constantly changing, and the circumstances and factors which may have led to you placing a winning trade yesterday, may not be the same as they are today. A lot of the success of discretionary traders can be attributed to their ability to perceive trade opportunity. However, what may be perceived as the same setup that occurred in the past, may in fact be an entirely different setup upon a more thorough analysis. As humans, we are susceptible to biases that allow us to equally treat all market situations simply because they look similar to past situations. Looks can be deceiving when it comes to market analysis and one must perform careful due diligence to make sure that they are comparing apples to apples.
If your trading plan (a) gives you a trade on 80% of trading days, (b) wins at least 50% of trades, and (c) has an average win twice as large as the average loss, you are in good shape, providing the plan uses a sensible money management scheme. (It is vital to limit the risk in each trade so that a run of losing trades does not take you out of the game.) However, you still have to implement the plan, and that can be harder than it sounds. Simple errors made in the heat of action can have quite an impact on your results. And lapses in trading discipline, where you deliberately stray from your plan, can undermine the efforts of even experienced traders. It is especially tempting to deviate from plan when you have had a few losing trades. I find the best mindset is to look upon my trading as a daily trip to the casino, where I have been granted the right to place just one bet with odds in my favour. Over time, I ought to win, providing I have enough capital to survive short term runs of bad luck. But a casino has many temptations, and I could easily be lured into placing unplanned bets, or changing my standard bet to one that looks better, but has worse odds. Strong self discipline in the adrenaline pumped atmosphere of the gaming rooms is essential.
In a Forex day trading system, you require quite less starting capital. With Forex brokers allowing traders to open trading accounts with less than $250, the Forex day trading system is open for everyone. The main job of the day traders is to capture the intraday price swing. During each trading day in Forex day trading system the overall foreign currency trading volume is determined by the market time i.e. the times when the markets open and the times when these markets overlap with each other.
With each passing moment, the Forex currency trading volume remains high, but it goes to the peak when the European and US markets open at the same time - from 1 pm GMT to 4 pm GMT. During day trading, a day trader quickly buys a large number of foreign currencies at a time and sells it once they see that the price rises within a day.
However, it is very important for the day traders to understand how margin works in Forex day trading system, how much time they will have to meet a margin call and what is the potential for getting into it. Forex day trading system is not for everyone because it involves significant risks. You should not start day trading with money that you cannot afford to lose. Since your job is to capture various price swings during the day, and the trade opens and closes on the same day, your profit would also be less than the trade that is set to meet long-term goal.
The main disadvantage of discretionary trading is the inconsistent results this style of trading can potentially produce. Markets are constantly changing, and the circumstances and factors which may have led to you placing a winning trade yesterday, may not be the same as they are today. A lot of the success of discretionary traders can be attributed to their ability to perceive trade opportunity. However, what may be perceived as the same setup that occurred in the past, may in fact be an entirely different setup upon a more thorough analysis. As humans, we are susceptible to biases that allow us to equally treat all market situations simply because they look similar to past situations. Looks can be deceiving when it comes to market analysis and one must perform careful due diligence to make sure that they are comparing apples to apples.
If your trading plan (a) gives you a trade on 80% of trading days, (b) wins at least 50% of trades, and (c) has an average win twice as large as the average loss, you are in good shape, providing the plan uses a sensible money management scheme. (It is vital to limit the risk in each trade so that a run of losing trades does not take you out of the game.) However, you still have to implement the plan, and that can be harder than it sounds. Simple errors made in the heat of action can have quite an impact on your results. And lapses in trading discipline, where you deliberately stray from your plan, can undermine the efforts of even experienced traders. It is especially tempting to deviate from plan when you have had a few losing trades. I find the best mindset is to look upon my trading as a daily trip to the casino, where I have been granted the right to place just one bet with odds in my favour. Over time, I ought to win, providing I have enough capital to survive short term runs of bad luck. But a casino has many temptations, and I could easily be lured into placing unplanned bets, or changing my standard bet to one that looks better, but has worse odds. Strong self discipline in the adrenaline pumped atmosphere of the gaming rooms is essential.
About the Author:
Frank Miller has a Debt Consolidation Blog & Finance, these are some of the articles: How Much Long Term Care Coverage Do I Need You have full permission to reprint this article provided this box is kept unchanged.
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