2Bull Forex Blog

With the rise of day trading online, there are a lot of day trading articles on the net. If you want good information you want day trading articles that have been written by people who actually trade and thats what were going to look at here.

The vast majority of articles written on day trading are not written by traders at all.
There normally written by people who are simply trying to make money by appealing to traders to visit their site where they have ad words or products from vendors for sale.

These products appeal to people who are looking for an easy way to make money in forex and they lose.

The fact is day trading simply doesn’t work.

As an experienced trader, I find it amusing that people actually believe what some authors say in terms of day trading, here are just some examples:

“Predict market tops and bottoms with 90% accuracy”

“Scalp profits everyday”

“Earn $10,000 a month with this system”

Of course these day trading systems don’t work as the track record that comes with them will have the disclaimer below (or a similar one), 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”.

What this means is a vendor can make up any track record they like in hindsight, knowing the closing prices - but trading is actually a little more difficult, you have to trade without knowing the closing prices!

You will never see a day trading system with a track record of real gains, audited with account statements over the longer term. If you do - let me know because I have been trading for 5 years and never seen one.

Day trading forex day trading stocks, day trading commodities, day trading CFD’s - it doesn’t matter - day trading does not work in any of them due to the following:

All volatility in short term time frames is random and prices can and do go anywhere, meaning that if you try and use support and resistance levels they wont help you with your trading signal or help you get profitable market timing.

You therefore can’t get the odds in your favour and will lose over time.

This is fairly obvious when you consider that the price in any financial market is made by a vast diverse group of traders.

You simply cannot predict what this vast mass of people will do in a period of a few hours - the time period is simply to short.

If you want to make money trading then you need to trade longer time frames, where you can calculate and get the odds in your favour. This means swing trading or trend following.

So the next time you read a day trading article you should be aware that the person writing it has probably got no experience on the subject they are actually writing about. There are lots of day trading articles and the vast majority of the authors have simply never traded.

With the rise of online trading, traders are engaging in day trading and trying to make small regular profits and for this they need a day trading broker. If you want to choose one use the simple tips below.

Transaction Costs

The most important criteria in choosing a day trading broker is the cost of doing business. You should choose the lowest transaction cost you can. If you trade regularly then transaction fees mount up and impact your profit and loss.

Execution Only

If you want a day trading broker, you want them to transact orders only and don’t want advice. Many brokers will offer you signals and alerts and advice - don’t fall for it. If brokers could make money they would be traders and not brokers.

If you want to be successful in trading then you need to do it on your own - only you can give yourself success.

Trading Platform

You need to be comfortable with the platform the broker uses and ensure that it’s reliable and you have 24 hour support. In most cases, a broker will let you test drive the trading platform and you can see how you get on with it with a demo trading account before risking real money.

Size and Security

Look for well capitalized brokers that have been in business for a few years, are stable and look at regulation and protection of your money.

Bigger is better when you are using a broker on an execution only basis.

You want a broker that has been known for reliability over the years and you can easily check this by looking on the web.

You should always search the brokers name and check any good and bad press they have. In many instances you will surprised at what you find.

Funding

Look at how quickly you can fund your account and how quickly you can withdraw.

You should also look to see if the broker accepts online payments, safely and securely.

When choosing a day trading broker (or any broker for that matter), check the above points and keep in mind that your major cost is your transaction fee and this should be as low as possible.

If you want to day trade and want a day trading broker that can give you the best service, the above are common sense tips that will help you find one.

With the rise of online trading we have seen a dramatic rise in the number of day trading sites offering a variety of day trading systems, e-books and courses to help you scalp the market and make small regular profits that can build wealth, let’s look at choosing the best.

One of the big myths of trading is that you can make money day trading - if you ever see a day trading site that has a track record of gains, look for the disclaimer below or a similar one. 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”.

So this means you can make up any track record you like, as you are simply simulating it and know the closing prices - try and find a day trader with a real time track record audited over the longer term ( 2 years plus ) and your in for a long search.

Day trading and long term profits are a contradiction in terms - why?

The simple reason is - you can never get the odds in your favor and are guaranteed to lose. All short term volatility is random, support and resistance levels in these time frames are meaningless and you simply can’t set levels that are valid to key off and get the odds in your favor.

Of course this is obvious. We have a huge mass of traders millions of them, trading all with different systems and personalities and to say you can measure what they will do in a few hours is laughable and totally incorrect.

Many traders say that human nature is constant and therefore prices move to a scientific theory. You will often find them use such theories as - Gann, Elliot and Fibonacci but they don’t work.

Why?

Because human nature is constant but we certainly don’t conform to a scientific theory when trading! We are creatures of emotion and you can’t measure these scientifically.

If there were a scientific theory that worked, we would all know the price in advance and there would be no market.

Most day trading sites are not run by traders at all there run by marketing organizations that sell simulated track records with hyped copy, to appeal to naïve or greedy traders - they make their income from selling product and the trader takes the losses in the market.

If you want to make money avoid day trading sites and day trading it really is that simple instead, look to trade longer term trends where you can get the odds in your favor.

Here we are going to give you a simple forex trading tip that is simple to learn, easy to use and can help you spot big trend changes in advance so here it is.

Its learning to spot bullish or bearish extremes in the market by using news stories - but your not going to be interested in the story itself just its influence on price.

Let’s look at it in more detail (and show you a live example of this tip in action) and start with a simple equation which is an essential part of any trader’s forex education:

Fundamentals + Investor Perception = Forex Prices

The fundamentals are there for everyone to see - but we all see them differently, drawing our own conclusions on what they mean and this huge mass of opinions equals the market price.

It’s a fact that as humans we are subject to our emotions when we trade.

The vast majority of traders are subject to greed and fear when buying or selling currencies. It is these emotions of greed and fear that always cause prices to spike to far away from fair value, as the investor psychology becomes to bullish or bearish.

Throughout history the most important market tops have formed when the news is most bullish and market bottoms when the news is most bearish.

What you need to look for in news stories is:

A bullish or bearish extreme in investor sentiment, then look for bullish or bearish news which does not rally the market when it’s bullish or see a sell off when it’s bearish.

Let’s look at a real life scenario and how this works.

For the last week the vast majority of traders ( around 90% ) have been expecting the Fed to cut US interest rates by 50 bps. On Thursday the Fed chairman spoke and seemed to confirm this - the vast majority of analysts then predicted a huge dollar sell off of the dollar against the euro - but it never came.

Why?

Because this news has been discounted earlier and the market hardly moved.

The euro hit a resistance level at 1.48 and this level is holding. This shows that the bearish dollar news is discounted and the Dollar has already absorbed the interest rate cut news in full.

So with the market stalling at a key resistance level, its time to look at the forex charts, for a turn down in price momentum and sell the euro.

While many in the news have been calling for a massive dollar sell off the charts are telling a different story.

Its time to buy the dollar has been pushed to far away from fair value.

We would expect the euro to trade below 1.40 in the next few months despite the vast majority of traders thinking it is going too sold into oblivion.

There is an old saying:

” If you can hold your head when everyone around you is losing theirs you probably haven’t heard the news”

In trading terms you have - but you are seeing the news in a completely different way to the majority, by drawing conclusions based upon its impact on price.

This forex trading tip will put you opposite the majority most of the time but as the majority lose that’s no bad thing. Learn to step back from the crowd and draw different conclusions, this forex trading tip can make huge profits and help you enjoy currency trading success.