Should you even consider Forex day trading? by:John H, Anderson
In the world of Forex trading, there are a special few (thousand) that have been playing with the day trade option for a long time
. Their basic strategy is to minimise risk of the long view, liquidate resources and options before the market closes on the day and accumulate small increments in pips (percentage in points) over time to garner profits. While they might not make as much money as those who deal in larger amounts and take greater risks in the long view Forex trade, these men and women still do make a fair bit of money.
They are usually full time investors who work an average of 4 - 10 hours a day, and the day usually starts when the market opens at the place of their choice and ends somewhere towards the end of the day. By that time, they would be in a position to liquidate their margins and see how much they made or they lost. Day trading or Forex day trading is something of a niche trading option and if you are a beginner in the market, I would heartily suggest that you do not try your hand at it until you have been investing in the paper trade for at least a couple of years. No doubt; it is a viable way for you to make money but it is 10x harder and 10x more complicated.
Firstly, you cannot beat those who have been doing this for a long time because they know exactly what to do to capture even the smallest price movements and quickly change their position according to a market psychology they know inside out. You, on the other hand, do not have any experience with this and will most likely be left breathless and the speed of the market, where price movements and exchange rates can move at the speed of a few hours to even a few minutes! Furthermore, you need to be able to sit down in front of your computer, with charts in hand, strategies in place and all the technical and fundamental analysis you have done for the week.
That is a minimum of 4 hours a day, and most investors recommend that you put in at least 6 hours to make your day at the market viable (unless there is a massive movement which causes you to garner plenty of pips early in the morning). If you are considering the Forex market as a part time option, then I would suggest that this would not be the most viable option. You cannot waver; this is not a touch and go option, neither can you leave it to your broker, whose already diluted approach will make your profit potential decrease dramatically and anything you make will have to be dissected and distributed to them anyway. So what do you do? Don't consider Forex day trading. You need mastery over market psychology and behaviour as well as know what to look out for in the market. Give it a few months or even 2 years of knowing the market as intimately as possible.
About the author
John H. Anderson is a specialist in Forex Trading with more than a decade of experience. He owns Trade-currency.org where he provides his Forex Trading Review
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