Why you must learn to avoid being a day trader in forex trading
This article tells you why you must learn to ignore the day trader hype in forex trading.
For most people delving into the trading world, the main attraction is the prospect of making fast money by quickly entering and exiting trades or day trading. They learn forex trading by practicing scalping and trading off the minute charts and in the starting months of live trading, they will find out that trading in this manner is not only stressful but also very time intensive and it takes someone with huge discipline levels to make any form of consistent profits trading in this manner.
If you learn forex trading in this manner, you will find yourself taking more trades than the individual who is not a day trader. The individual that doesn’t day trade the markets take quality ahead of quantity while you are doing the exact opposite. To succeed in trading, you must learn to keep your capital and instead of taking every trade that comes your way, take only the high probability traders.
Learn to avoid forex trading because it goes against the top down approach to trading
If you look around online, you will notice the fact that many websites are promoting day trading and painting it as the best way to go for new traders. In forex forums equally, the story is the same. Threads that were created to promote scalping strategies gather more attention than those created to promote systems that focus on longer time frames. What these newbies do not understand is that it is only expert traders that succeed at day trading the markets. This is because they already understand the top down approach to trading, something that isn’t talked about often when these one minute chart strategies are being discussed.
Trading is similar to building a house. When you are building a house, your first port of call is the foundation of the house. After the foundation other parts of the house begin taking shape and before you know it you are at the level where you are arguing with your spouse regarding what type of TV to purchase. In trading, you need to understand what the higher charts are doing before you can be able to wrap your head around what is happening on the lower timeframes. You have to first of all look at the daily charts, then look at the 4H charts and then the hourly charts. This will help you gauge what the overall trend is and it will help you take trades only in the direction of the main trend. Day traders do not do this and this explains the high number of losing trades they have.
When you day trade the markets, you are making your broker rich
Some newbies try to day trade the markets by picking any currency pair that presents them with an opportunity to trade. Well there is nothing wrong with this as long as you are trading the majors but as soon as you pick an exotic or any of the metals where the spread could be as high as 10pips, you are shooting yourself in the foot. A typical day trader takes as many as 20 trades a day. This means you have to pay 200pips in spread alone!
If you have been day trading the markets for years and maintained success then stick to it but if you are a new trader, you may want to learn how to trade only the higher time frames.