Friday, August 28, 2009
Forex Day Trading - The Profit Illusion That Sees Traders Lose
Forex day trading simply doesn’t work and you will never find a trader with a track record of real time profits, however more novice traders try this method than any other type of trading. This is desite the fact it will never work, because you can't get the odds in your favor. If you are considering day trading then you should read this article. First let’s look at why forex day trading doesn’t work. The time period is to short! Volatility in short time frames is random - PERIOD This means daily support and resistance levels are meaningless and you can never get the odds on your side longer term. Now let’s look at the illusion of profits. The Marketing Illusion You have seen them the headlines promising you 100% annual profits or a regular monthly income - all for just a few hundred dollars. Of course the reality is they profits do not exist and it's simply clever marketing copy. Look at the facts and you will see no substantiation whatsoever to back up the claims. You will of course get a hypothetical track record, done in hindsight but the key word to consider here is hindsight! The person presenting the track record knows the closing prices when they do the track record. If I knew tomorrow’s closing price today, I would be a multi millionaire but that’s not the reality of forex trading. The people who create the illusion you can make money forex day trading can never present a long term track record of real profits – that’s real dollars made in the market by them. Why Create The Illusion? These people are mostly failed brokers or marketing organizations that actually have the sense not to trade the system themselves. Why? Becuase they can make a guaranteed return selling the system to naive forex traders. Patterns that don’t repeat Many traders look at back data and see patterns. They think they can trade themselves but this is a bit like roulette wheel paterns - there appears to be an order but the same sequence never repeat again – its an illusion, that fools many traders and when they try and trade for real they lose their equity. Still Not Convinced Day Trading Doesn’t Work? Here is a simple test you can do for yourself: Ask anyone who claims they make money day trading, to produce to you a real time track record of profits, with supporting bank statements and trades. You won’t get one. Day trading does not make money, apart for the vendors who sell e-books and forex day trading systems and they cheerfully let you take the losses, while they bank a fee for their services thats guaranteed. Don’t fall into the forex day trading can make you money trap! If you do you will lose your equity quickly.