There are many reasons why the majority of forex systems simply do not work, as I'm about to discuss.
Firstly you will often find that many forex systems you come across online are incomplete. They will go into great depth describing the basics of forex trading but when it comes down to the finer details of how to trade the system in question, it will very often leave the trader wondering how they actually trade the system.
Another reason why a lot of systems fail is because they completely disregard risk management. This is just stupid because it's no good outlining a system if you don't mention when you should admit defeat and cut your losses. No system is perfect and they will always generate some losses, so they should always mention how you can keep these losses as small as possible.
A third reason why a lot of systems fail is because they are based on trading important news events. By that I mean things like interest rate decisions and important economic data releases which have such a major impact on the major currency pairs. These systems are based on trading highly volatile markets which often means increased spreads as well, so it is very hard to actually make money trading this way on a consistent basis.
The final reason is simply because they are short-term trading systems. Consistently making profits from day trading the forex markets is extremely difficult, and although a lot of systems may make profits in the short-term, in the long run the vast majority of these systems will end up losing money.
So if you are looking for a profitable forex trading system, you should ideally look for ones that use the longer term charts such as the daily charts. The systems included in the Forex Profit Accelerator course are examples of such systems but there are lots of others out there as well.
Showing posts with label forex day trading. Show all posts
Showing posts with label forex day trading. Show all posts
Saturday, 21 March 2009
Monday, 14 April 2008
Forex Day Trading 101 - Important Facts for Novice Traders
This article is for novice traders and we are going to look at 3 facts which are all you need to know to decide whether day trading is right for you. So let's continue and review our forex trading 101 continues below...
Fact 1
All Short Term Volatility is Random
There is no order to short term volatility and prices can and do go anywhere in short time periods - Why?
Quite simply there are huge numbers of traders all with different levels of skills, systems and motivations for trading and you can tell what this mass diverse group of people will do in short periods of time - it's laughable that traders think you can measure human psychology of millions in just a few hours but they do and they lose for believing it.
Fact 2
Random Volatility = No Odds on Your Side
Forget the far out investment crowd who believe there scientific order and you can predict forex prices you can't ( if you could there would be no market as we would all know the answer in advance!), so those systems who tell you can make a regular income guaranteed are totally wrong. Forex trading is an odds game and to win you must be able to get the odds on your side. If volatility is random, you can't get the odds on your side and will lose - period.
Fact 3
Day Trading Breaks a Fundamental Rule of Trading
This is of course run your profits to cover your inevitable losses.
In forex day trading stops are close and losses are small and because you can get the odds on your side, you have a lot of them. Of course sometimes the forex day trader ends up with a profit when he's lucky - what does the trader do? Run it? Not a chance he cuts it!
It's pretty obvious that you would have to have luck constantly on your side to win and of course luck doesn't last forever. Eventually you have small losses and lots of them and the occasional small profit which leads to a decline and final wipe out of equity.
What about all the track records that claim to make money you may ask?
Well they all have the disclaimer / warning repeated below or a similar one and they mean nothing, as there just saying the track record has been made up and simulated on paper in hypothetical trading, read it carefully:
"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".
You will NEVER see a day trading system sold online with a long term audited track record of gains - Why? If you have read this article you will already know the answer it doesn't work.
If you want to win you need to trade the odds and that means trading longer term.
So instead of day trading make longer term trading part of your forex education and you could enjoy currency trading success.
NEW! 2 X FREE ESSENTIAL TRADER PDFS
For free 2 x trading Pdf's with 90 of pages of essential info on Currency Trading Basics visit our website at: http://www.learncurrencytradingonline.com
Fact 1
All Short Term Volatility is Random
There is no order to short term volatility and prices can and do go anywhere in short time periods - Why?
Quite simply there are huge numbers of traders all with different levels of skills, systems and motivations for trading and you can tell what this mass diverse group of people will do in short periods of time - it's laughable that traders think you can measure human psychology of millions in just a few hours but they do and they lose for believing it.
Fact 2
Random Volatility = No Odds on Your Side
Forget the far out investment crowd who believe there scientific order and you can predict forex prices you can't ( if you could there would be no market as we would all know the answer in advance!), so those systems who tell you can make a regular income guaranteed are totally wrong. Forex trading is an odds game and to win you must be able to get the odds on your side. If volatility is random, you can't get the odds on your side and will lose - period.
Fact 3
Day Trading Breaks a Fundamental Rule of Trading
This is of course run your profits to cover your inevitable losses.
In forex day trading stops are close and losses are small and because you can get the odds on your side, you have a lot of them. Of course sometimes the forex day trader ends up with a profit when he's lucky - what does the trader do? Run it? Not a chance he cuts it!
It's pretty obvious that you would have to have luck constantly on your side to win and of course luck doesn't last forever. Eventually you have small losses and lots of them and the occasional small profit which leads to a decline and final wipe out of equity.
What about all the track records that claim to make money you may ask?
Well they all have the disclaimer / warning repeated below or a similar one and they mean nothing, as there just saying the track record has been made up and simulated on paper in hypothetical trading, read it carefully:
"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".
You will NEVER see a day trading system sold online with a long term audited track record of gains - Why? If you have read this article you will already know the answer it doesn't work.
If you want to win you need to trade the odds and that means trading longer term.
So instead of day trading make longer term trading part of your forex education and you could enjoy currency trading success.
NEW! 2 X FREE ESSENTIAL TRADER PDFS
For free 2 x trading Pdf's with 90 of pages of essential info on Currency Trading Basics visit our website at: http://www.learncurrencytradingonline.com
Monday, 22 October 2007
Forex Day Trading - Beware Of Curve Fitting Or Lose
Forex day trading simply doesn't work and traders get wiped out yet, it is very popular and this popularity has nothing to do with profits and everything to do with curve fitting so lets look at.
Curve fitting is the bending of parameters of a system in hindsight to fit the data.
This is done by some traders who don't know what their doing and by forex day trading vendors who know exactly what their doing.
A trader I know compared curve fitting to - shooting blindly as a barn door, then afterwards drawing a chalk circle around everyone, to make it look like a bulls-eye!
Many traders test their day trading system over a period of data and they cant get a profit with the parameters or inputs they are using so they simply bend the system to fit - by optimizing the system rules. Of course, no period of data replicates itself exactly in the future and the optimized system collapses.
A curve fitted system normally has a lot of rules or parameters and unique rules and parameters for different market conditions or currencies and if it does - it will break in real time trading.
Forex traders don't just do this in day trading they do it in all areas - but its very common in day trading.
Vendors on the other hand, know that forex day trading is a good story and they therefore want to make an attractive track record to sell their system - so they optimize it to show big profits and low risk. If you look at some of the track records produced you know they can't be real - or not for a few hundred bucks!
All they do is present the track record and then put a disclaimer on them, to cover themselves and this the disclaimer you will see:
"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 show".
So you can make up whatever you wish as you know the closing prices. Of course, in reality these track records never make gains in real time, as the vendor does not have the advantage of the closing prices and being able to manipulate the track record.
Investors who buy these forex day trading systems from vendors, don't stop to think that these track records are not worth the paper their written on, trade them and lose.
Vendors make a lot of money from day trading by selling systems NOT trading the markets.
The buyer takes the loss and the vendor makes a profit from the sale.
You will never find a real time track record of profits (or if you do let me know) because day trading simply doesn't work. Here's why:
In daily time frames, all volatility is random and prices can and do go anywhere in a day. Support and resistance levels are meaningless and cannot be traded, you can't get the odds in your favour and you will lose.
Don't believe me?
Then try and find a real time track record and you wont get one.
Sure, those day trading track records look attractive - but keep in mind their almost certainly curve fitted, done in hindsight and will not repeat their profits in the real world.
NEW! FREE 2 x CRITICAL TRADER PDFS - NEWSLETTERS - TRADING ALERTS + MORE
On all aspects of becoming a profitable trader including: Free critical trader PDFS, and more FREE Forex Education visit our website at: http://www.learncurrencytradingonline.com/index.html
Curve fitting is the bending of parameters of a system in hindsight to fit the data.
This is done by some traders who don't know what their doing and by forex day trading vendors who know exactly what their doing.
A trader I know compared curve fitting to - shooting blindly as a barn door, then afterwards drawing a chalk circle around everyone, to make it look like a bulls-eye!
Many traders test their day trading system over a period of data and they cant get a profit with the parameters or inputs they are using so they simply bend the system to fit - by optimizing the system rules. Of course, no period of data replicates itself exactly in the future and the optimized system collapses.
A curve fitted system normally has a lot of rules or parameters and unique rules and parameters for different market conditions or currencies and if it does - it will break in real time trading.
Forex traders don't just do this in day trading they do it in all areas - but its very common in day trading.
Vendors on the other hand, know that forex day trading is a good story and they therefore want to make an attractive track record to sell their system - so they optimize it to show big profits and low risk. If you look at some of the track records produced you know they can't be real - or not for a few hundred bucks!
All they do is present the track record and then put a disclaimer on them, to cover themselves and this the disclaimer you will see:
"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 show".
So you can make up whatever you wish as you know the closing prices. Of course, in reality these track records never make gains in real time, as the vendor does not have the advantage of the closing prices and being able to manipulate the track record.
Investors who buy these forex day trading systems from vendors, don't stop to think that these track records are not worth the paper their written on, trade them and lose.
Vendors make a lot of money from day trading by selling systems NOT trading the markets.
The buyer takes the loss and the vendor makes a profit from the sale.
You will never find a real time track record of profits (or if you do let me know) because day trading simply doesn't work. Here's why:
In daily time frames, all volatility is random and prices can and do go anywhere in a day. Support and resistance levels are meaningless and cannot be traded, you can't get the odds in your favour and you will lose.
Don't believe me?
Then try and find a real time track record and you wont get one.
Sure, those day trading track records look attractive - but keep in mind their almost certainly curve fitted, done in hindsight and will not repeat their profits in the real world.
NEW! FREE 2 x CRITICAL TRADER PDFS - NEWSLETTERS - TRADING ALERTS + MORE
On all aspects of becoming a profitable trader including: Free critical trader PDFS, and more FREE Forex Education visit our website at: http://www.learncurrencytradingonline.com/index.html
Tuesday, 14 August 2007
Forex Day Trading - A 100% Way To Lose All Your Money Quickly
(by Kelly Price)
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.
GRAB 3 X FREE TRADER PDF'S NEWSLETTERS AND MUCH MORE!
On all aspects of becoming a profitable trader including features, downloads and some critical FREE Trader PDF's and more FREE Forex Education visit our website at http://www.net-planet.org/index.html
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.
GRAB 3 X FREE TRADER PDF'S NEWSLETTERS AND MUCH MORE!
On all aspects of becoming a profitable trader including features, downloads and some critical FREE Trader PDF's and more FREE Forex Education visit our website at http://www.net-planet.org/index.html
Saturday, 28 April 2007
Forex Day Trading- Two Step Trend Analysis
(by Michael A Jones)
If you approach forex day trading by just looking at the 5 minute and 15 minute charts there is a strong possibility your account will evaporate sooner rather than later.
In order to get a feel for the market and an indication of the current trend it is necessary to do an analysis by looking at multiple charts on different time frames starting with higher level charts first.
Rather than having the charts cluttered with numerous indicators and signals which can cause signal paralysis, I recommend just two:
1. MACD (with default settings)
2. 200 EMA (Exponential Moving Average)
Now examine your charts using a top down approach:
Daily
4 Hour
1 Hour
As you check each chart take note of these two factors:
Has MACD crossed down or up and is it above or below the water line?
Is price above or below the 200 EMA?
While it is not crucial to have them all lined up on these three time frames for successful forex day trading, if you want to be a cautious trader and go for high probability trades then certainly MACD on the 4 hour chart and 1 hour chart should be in agreement as also should price in relation to the 200 EMA.
The daily chart can be useful in seeing the larger picture and for noting key levels of support and resistance. They stand out on a daily chart so if price is within 100 pips of a crucial level of support or resistance as seen on the daily chart, make a note of the figure.
Then scale down to the lower time frames and see if this level matches with other indicators such as pivot points or Fibonacci levels.
Once you have done this groundwork, NOW you can look at the 15 minute and 5 minute charts for a suitable entry point.
Remember, for successful Forex day trading you need to adhere to the No. 1 commandment: Buy The Dips and Sell the Rallies!
So avoid chasing the market and going with the flow. Instead, wait for price to come the level you want, set your entry order, and let price pull you into the trade.
The Danger With Lower Time Frames
Just concentrating on the 15 minute and 5 minute charts will not give you the bigger picture. You could see what looks like a perfectly good trade and set your stops and limits only to find you get blown out within a few minutes.
By looking at the higher time frame you would probably have seen you were close to a key support or resistance level and either not gone into the trade or adjusted your stops and limits accordingly.
For the novice, Forex day trading can involve a huge learning curve. Include this simple daily top down analysis approach to your trading and protect yourself against making trades you wish you didn't!
Michael A. Jones is a writer, webmaster and Forex trader.
Do you want to make consistent profits and take your trading to the next level?
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For a purely mechanical strategy for the EUR/USD pair click here:
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Saturday, 21 April 2007
FOREX Day Trading - A Great Way To Wipe Out Your Equity Quickly
(by Sacha Tarkovsky)
There is no better way to wipe out your equity quickly than FOREX day trading.
I read all the time about how great FOREX day trading is, but never seen anyone able to give me a real time long term track record.
The reason of course is:
FOREX day trading is based upon logic that is simply ridiculous and dooms it to failure.
So why do day traders lose?
Consider this:
Day traders think they can predict movements in short time frames, but all short term moves are random and volatility can (and does) take prices anywhere.
If all the moves in a day are random you have no chance of making money as support and resistance points are meaningless.
Trillions of dollars are traded daily by millions of participants and to try and predict where prices will go in short time frames is laughable.
Support and resistance levels are NOT valid
Day traders try and work off support and resistance levels and continually get stopped out as volatility can and does take prices anywhere.
So you have a high probability of being stopped out and day trader’s pile up a huge number of small losses.
Occasionally they get a winning trade (more by luck than judgement) but of course they snatch any profit they can get as running profits is totally alien to day traders.
The result is a wipe out of equity and it normally happens quickly.
What about all the day trading systems promising gains?
Most of these are sold by people who have never traded and rely on enticing copy to sell their systems, or failed brokers looking to appeal to the greed and ignorance of buyers.
These day trading systems NEVER come with real time track records they come with hypothetical track records.
If you don’t know a hypothetical track record is one those us done in hindsight knowing the closing prices!
Well that’s hard; my seven year old daughter could do that.
The fact is day trading is simply a great way to lose money quickly and it is surprising how many traders fall into the trap of trying to win at it
Don’t make the same mistake, unless you want to lose your account equity quickly.
FREE ESSENTIAL TRADER PDF'S AND MUCH MORE
On all aspects of becoming a profitable trader including features, downloads and some great FREE Trading PDF's visit our website at http://www.net-planet.org/index.html
--------------------------------------------------------------------------
If you're looking for a forex trading platform, I can highly recommend Easy Forex. They offer competitive spreads, guaranteed stop-losses if required, live training and support, and you can start trading with as little as $25.
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