The Profitability of Day Trading Forex

Day trading forex is much more difficult and time consuming than day to day trading, as the trader is under much more pressure not to tolerate much risk.

The Answer is Yes! Day Trading Forex is Profitable, But Also Risky

As most good traders know, day trading forex is often about chasing market momentum and paying attention to few key price levels. Other traders go further by paying attention to time zones and time related factors, but they all have some way for making good trades. In order to learn forex trading this way, one has to commit fully to the task. Day trading requires at least few hours of total commitment, and very low tolerance for excessive risk. Once the trade is no longer valid the trader has to get out, no matter what. Forex charts can be confusing at times, to the swing trader or investor, but they have ways to make sense of the markets, they also have the luxury of time. The day trader by contrast implements a mechanical approach, a kind of martial art methodology, where each step is discrete and no much flexibility is allowed. In fact, there is no much thinking allowed in day trading, it’s open the trade, watch the criteria, and then either close at a loss or close a little while later at some profit, even small profit.

Day traders have simple, strict rules, it’s almost like a martial art, where discipline and repetition of simple steps makes meeting the objective possible.

What One Has to be Careful about

Day trading forex is a very time consuming affair, most new traders are actually wasting their time because of being ill-prepared and not educated on day trading specifically. Even those that win out of those new traders end up making less money per hour, than they would be making flipping burgers at a fast food joint. There is the bright side however, and this is what some good traders and some investment banks do. That is to develop forex strategies for different currency pairs, each has to be specific and be tested well. The more one can specialize in one currency pair, the more opportunities they will be finding when trading. Being a specialist means that you can in fact be a good day trader, one who can beat the average $5 or $6 that most amateur winning traders actually make day trading. In order to be successful in this game, you need to focus strongly on one pair, have the discipline of the strict day-trader, and be willing not to trade on days where no entry criteria are met. Even though everybody wants to make a 9-5 job out of day-trading, this is not possible. On some days one can trade and win $2,000, while on other days one has to refrain from trading altogether and not risk $1. The reason the amateur winners only make $5-$6 per hours, on average, is because they do not refrain from over trading and they are giving back most of their gains, resulting in that poor, fast food joint kind of pay rate. The truth is that some of them have good trading skills, and they can increase their profitability 10 fold, simply by reducing the number of trades.