Most newbie forex traders go for forex day trading as a basis for their forex trading strategy, as they see it as a low risk way to trade and an opportunity to make small regular profits. This article is all about day trading for novices and what they need to know.
The rise of online forex trading, tighter spreads and lower minimums has led to an influx of day traders and there are plenty of vendors offering day trading or scalping systems which claim to make big profits but there is a problem.
They all lose - because day trading by its very nature is bound to fail. If you see a day trading forex track record chances are it has a disclaimer on it like the following one - take a read and you will see its not reality:
"CFTC RULE 4.41 - Hypothetical or simulated performance results have certain limitations. Unlike an actual performance record, simulated results do not represent actual trading. Also, since the trades have not been executed, the results may have under-or-over compensated for the impact, if any, of certain market factors, such as lack of liquidity. Simulated trading programs in general are also subject to the fact that they are designed with the benefit of hindsight. No representation is being made that any account will or is likely to achieve profit or losses similar to those shown".
Of course it's simulated knowing what happened and vendors can and do make up track records to sell to greedy nave traders and the greedy herd all lose.
So why doesn't day trading work then?
It's obvious we have countless millions of traders all with their own different forex trading strategies and views and to say you can predict what they will do in a few hours is totally absurd.
Humans are not predictable in short time frames their the total opposite!
All the volatility in short term time frames is random, daily ranges cannot act as support and resistance and anyone trying to trade the data is wasting their time - its simply not valid.
If you want to win:
Keep in mind you need the odds on your side and that means trading longer term.
If you do, this you're using valid data where you can win and it really is as simple as that. The shame is many day traders work hard (far harder than a lot of the traders who make big gains) but they lose through ignorance of how and why markets really move.
Day trading for novices is simply a quick lesson in how to wipe out account equity - PERIOD.
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