2Bull Forex Blog

I read a lot of material from e-book sellers and others about forex day trading and how easy it is, but these guys have probably never traded in their lives.

The fact is if you want to make money don’t day trade, you will lose your equity. Here we will look at why.

The Odds & Data

The longer and more data you have, the easier it is to calculate the odds. Currencies represent the overall health of the economy and it’s a fact that the longer term trends last for months or years – These are the trends that make money.

Day trading is doomed to failure, as you have no reliable data to work with as the time span is to short. If you have no data to work with then how can you day trade? You may as well toss a coin. Day trading sounds appealing, scalping the market, getting in and out quickly - but you won’t win.

CONSIDER THIS FACT TOO:

Let’s assume you don’t believe me and you think the data is reliable enough.

Well, how about this to consider:

To make money trading “Run Your Profits and cut your losses”

All professional traders know this is the way to make money.

You need to make sure that your profits are big enough to cover your inevitable losses. In day trading you can cut your losses but running your profit is a contradiction in terms! You can’t, because even if you have a winning trade you close it too soon. This would seem common sense, but day traders don’t believe it but they should, it’s a fundamental rule of investing. I know long term traders who win maybe 20% of the time and make huge profits.

Why?

Quite simply, their profits are far bigger than their losses, on the other hand, I have seen day traders win 50% of the time and get wiped out. If you want a thrill then forex day trading is exciting but you will lose your money. If you don’t mind losing money, go ahead but if it were me, I would play roulette it’s just as exciting and more fun.

Fact is those e-books and brokers peddling day trading systems normally have never traded and rely on persuasive copy and greed to sell their systems. Normally they have their eye on the commission they can make.

Forex day trading is great for that but that won’t help you make money. If you still don’t believe me then when you get a broker or e-bookseller who wants you to day trade ask them for the following:

A real time audited track record (minimum 3 years) net of all fees showing a profit.

Try it and see if you get one for a forex day trading system.

Many penny stock traders enjoy the idea of swing trading. This allows you to buy and follow the trend without watching through the day. These penny stock plays are normally three to five day plays sometimes longer. I have found through penny stock trading my top 12 rules for swing trading.

1. If the trade moves in your favor, carry it overnight–the odds favor follow-through. Expect to exit the next day around the objective point. An overnight gap presents an excellent opportunity to take profits. Concentrating on only one entry or one exit per day relieves the pressure.
2. If your entry is correct, the market should move favorably almost immediately. It may come back to test and/or exceed your entry point a little, but that’s OK.
3. Do not carry a losing position overnight. Exit and play for better position the next day.
4. A strong close indicates a strong opening the following day.
5. If the market doesn’t perform as expected, exit on the first reaction.
6. If the market offers you a windfall of big profits, take them to the bank on the close.
7. If you are long and the market closes flat, indicating a lower opening the following day, scratch or exit the trade. Play for better position the next day.
8. It is always OK to scratch a trade!
9. Use tight stops when swing trading (wider stops when trading trend).
10. The goal always is to minimize risk and create “Freebies.”
11. When in doubt–get out! You have lost your road map and your game plan!
12. When the trade isn’t working, exit on the first reaction.

What is the stock market? What does that term really mean to you? To many of us it symbolizes a way to get rich quick, a way to make money without having to really go out and put our back into it but is that really what the stock market is all about?

The smartest and the safest way to look at it is as a tool, one that comes along with significant risk. In essence playing the stock market is a lot like gambling at your favorite casino, and what do you do there? You watch your pennies probably. This is something that too many people forget to do when they start investing.

Look at it this way; every cent that you invest is a cent that you could never see again. That is why it is imperative that you only invest the money that you can live without in the stock market. These are not money market plans, or RRSPs or even mutual funds. If you want to put your hard earned cash straight into the stock market you need to really know what you are doing. Gambling quickly loses its appeal when all is lost.

If you have never taken the time to learn a thing about stocks then you are a prime candidate to make some fatal mistakes. What you need to do is either invest the time you in learning the ins and outs of the stock market, or else hire a good and reputable financial planner.

You can get many books from your local library that will outline some fantastic strategies for making money with stocks, but you need to make sure that they are current. This is not so important when it comes to stock market philosophies but if you want real data on specific stocks and companies and market trends then yes, you need brand new books and magazines. Things change fast on the market and you need to be wholly up to date or you could find yourself on the floor without the shirt on your back.

Financial planners and stockbrokers, at least good ones, have all of this information right at their fingertips. These people have been to school and learned just what they need to know about the stock market and the stock trends as well as all of the best resources for up to date information. A reputable financial planner or stockbroker can make investing easy for you to do but this does come at a price. You will have to pay these professionals for their time and their effort. But if you do not have the time yourself then it is still definitely worth it.

The stock market is a gamble that can really work for you if you are wise and if you are not in a rush to get rich quick. If you have the time and the money to spend, then long term stock investing is always a good option, as long as you have done your homework first.