Day Trading Forex

Profit Potential

Why would anyone want to day trade? Simple. To paraphrase Bill Clinton, "It's the money, stupid. " If you can make money at a modest rate swing trading, why not increase the rate money is made by trading intra-day. That's the attraction. Just remember that just like any kind of trading, however, the money doesn't just flow in. There are things that you will need to watch out for.

Pitfalls

There are three things that people considering day trading don't seem to consider. (I know I sure didn't.)

1. Uneven equity curve. You will not steadily make money. I admit I get really sick of this "Make $500 a day!" nonsense. There is no such thing as steady money in trading. You will make some and then lose some. The idea is to make more than you lose. When you day trade, this is all taken to a new level. You lose and you make it so much faster.

As a side note, it's normal to have a larger trading account 5% of the time. In other words, only once a month will your bankroll set a new high. Most people don't know that.

2. Losing days. Having an uneven equity curve means that you will have losing days. You could have a day where you lose $1000. Yes, it happens. The sooner you accept that as a day trader, the more likely you are to succeed. (And you'll have a lot less stress.)

3. Days with no trades. The market does what it wants. There are days where no good trades materialize. So, that means that the winning day trader doesn't trade. Almost nothing is harder (at least for me) that sitting in front of the screen watching the price all day and taking no trade.

Myths

Day trading has taken on almost mystical proportions in some people's minds. I've heard some talking about how day traders make hundreds of trades daily. No day trader I've ever met does that. Try making one hundred trades a day and the spread with financially murder you. Day traders make from zero to maybe three trades in a day.

All of the hype advertising, purports that day trading is easy. Wrong! Anyone who has tried it can tell you that. However, then many of the people who tried it, and then failed, believe that it is impossible. It's not.

Steps To Success

That begs the question, how do you do it then? Here are the steps to success as a day trader as I see it.

1. Success at trading. Don't try to day trade until you've proven to yourself that you can trade successfully at a much slower pace.

2. Sufficient capital. If your trading account isn't in the high five figures, you shouldn't day trade (if that's going to be your only source of income).

3. A winning system. Day trading is harder than any other kind of trading that I know of. You really need to make sure your system will hold up. A system that works in a slower time frame will not necessarily work for day trading. Make sure you're system has a positive expectation.

4. Practice. Practice makes perfect. Yes, it's a tired old phrase, but it's true.

5. Patience. The market will try to destroy you as a new day trader. Have patience. Hang tough. You will make it, provided the previous four items are in order.