Feb 8, 2018
Forex day trading for beginners
What is daytrading
Intraday trading, also known as day trading, day trading, or day trading, is a set of Forex trading strategies where trades are opened and closed on the same day. Assuming that the market can only show a certain amount of exercise per day, an intraday trader or daytrader or day trader uses relatively riskier trading techniques to achieve their desired profits. Forex day trading strategies are more active and require traders to be present on the trading platform during the session.
There is a fairly general consensus that the smaller the time frame the trader works with, the more risk exposure. That is why Forex day trading can be described as one of the most risky approaches to the currency markets.
It is not necessarily the various Forex trading strategies that day traders or day traders have to use that increase the risk. It is more that Forex day trading rules are more harsh and less forgiving for day traders who do not follow them. Mistakes are more costly and have the potential to occur more frequently, since trading with a day-trading approach has a high frequency in itself.
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Day trading and day trader Strategy - and how does day trading work
The two factors that no day trader can do without - irrelevant to the type of Forex day trading strategy used - are volatility and liquidity. This generally seems to offer opportunities for all traders, but short-term traders who day trading are much more dependent on it.
Volatility is the magnitude of market movements. When acting in the short term, solid volatility is a must.This brings the selection of suitable instruments more or less back to the major currency pairs and some cross pairs , depending on the sessions. Speaking of sessions. since volatility session is dependent, knowing when to trade is just as important as what to trade.
Liquidity is just as important. Acting in very day is very precise. A long-term trader can afford to add 10 pips and 10 pips off. A short-term trader can not do this, because 10 pips, for example, can be the entire intended profit for a trade.
This precision comes naturally from the skills and experience of the trader, but good liquidity is also important. When there is no liquidity, the orders will not close at the desired price, no matter how good the trader is. This limits the intraday traders who want to daytrade in the selection instruments and times. Read more about Forex trading and the best days of the week .
Here are the three most popular Forex day trading strategies for very short-term investing.
Day Traden - Daytrader Scalping
Scalping focuses on making many small profits on minimal price movements through many trades. Scalping can be very exciting and exciting but also risky. The trickiest thing about scalping is probably the closing of loss-making trades on time. A scalper can not afford to wait until the market moves in a favorable direction again.
Become a scalper day trader or become a day trader? Then look at volatile instruments, good liquidity and perfect order execution speed. When properly mastered, scalping is potentially the most profitable day trading Forex or day trading CFD strategy. It is only the associated risks that prevent it from being the best Forex or CFD day trading strategy. Also read: 1 minute Forex Scalping Strategy .
Day trading - Intraday Reverse trading
This is undoubtedly a very tricky Forex and CFD intraday trading strategy, especially when used by inexperienced traders.
Reverse (reverse) trading is also called pull back (withdrawal) trading or counter trend (against the trend in) trading.
The risk lies in the basic principle of acting against the trend. A reverse trader must be able to identify potential pullbacks with a high probability, as well as to predict the strength. Although it is not impossible, it requires a lot of market knowledge, experience and practice.
Daytraden - Momentum Trading
This is a relatively simple day trading Forex and CFD strategy that looks at strong price movements accompanied by high volumes, and then acts in the same direction. A high level of discipline is needed in momentum trading , to wait for the best opportunity to open a position, and a solid control to stay focused to spot the exit signal.
Day trading is often advertised as the fastest way to make a profit in Forex trading. However, what the ads often forget to mention is that it is also one of the most difficult strategies to get the hang of. As a result, there are many traders who try and fail. The average income day trader? That is actually not to say in advance and there are also few statistics to be found. It all depends on how you organize and operate this strategy yourself. Here below some tips. Also read: What is the average profit for a Forex trader .
Forex Day Trader and Day Trader Tips
Practicing day trading is the least popular among professional traders and the most popular among beginners and inexperienced traders.
Are you a novice, this is the most important Forex day trading tip: stay away from day trading. First try to be consistently profitable on a live account for at least a year with long term trading strategies. The more experience you gain, the more and better you will be able to handle shorter time frames. If you decide to trade day, here are some Forex day trading tips that might help you.
Daytraders learn for beginners or a daytrading course or a day trading forum and day trading for dummies usually starts with research. Beginners are often looking for ways to improve their trading and often spend considerable time and energy searching for the holy grail. The Holy Grail in Forex is what traders call a perfect indicator or a trading system that offers trade setups with 100% success. Unfortunately, perfect systems do not exist, and the only holy grail is money management .
The best day trading software for beginners is without a doubt the MetaTrader 4 platform because you can also trade in micro lots.
- Open a demo account using the MetaTrader 4 platform
- Choose a strategy from one of the webinars .
- Deal with the strategy on the demo account until you are consistently profitable.
- Act on the demo account exactly the same as you would 'real' money on a live account.
- The habits that you develop on the demo account have to be transferred to your live action unconsciously.
Develop a trading plan and follow it strictly to manage your risks in the right way. As mentioned earlier, Forex and CFD day trading is generally more risky than long-term trading, particularly because of the higher pace and frequency of trades. Day traders or day traders experience more pressure and must be able to make decisions quickly and bear the full responsibility of the results. A trading plan is an absolute must for a daytrader.
Try to keep your loss-making trades open too long. Connect loss-making trades in accordance with your proposed exit strategies from your trading plan. Remember, if you keep this kind of trades open too long, they will not only consume your profits but also your time.
What about a stop-loss? There are two types that a day trader must consider.
A physical stop-loss order placed at a price level that is in line with the risk tolerance, which you should have determined in your trading plan. Around 1 to 2% is generally seen as a good level. This is more or less the most you can afford to lose in one trade. The other type is a mental stop, and this is one that is triggered by the trader when he feels that something is not going well.
Have you ever opened a trade and then saw the market make an unexpected move, where you realized that this trade was not such a good idea and that it is time to close it? That is a mental stop. The trick is not to confuse it with panic. That is why both physical and mental stops must be considered and thought through before you open a trade, and not just after it.
Retail traders often have another rule to which their stop-loss must comply. They set a maximum loss per day that they can have financially and mentally. When that point is reached they stop trading for that day. They know that nothing good comes from emotional action. Inexperienced traders, in contrast, often do not know well when to stop. They often feel obliged to make up for the losses for that day before the day is over, which can lead to 'revenge trading', something that almost never works out well.
Exceptions to these rules are possible, but must be managed with special attention. Good results should not let you be tempted to reinforce exceptions. Bad results should be seen as a reminder why these rules exist.
Also always be very careful with trading around major news or events or avoid trading all the way around, unless there are really specific market conditions that emerge from your trading strategy. But be careful!
Even if you know more or less what the news or announcement will be, it remains very difficult to predict how the market will react in the first few hours. Bullish news can cause a bearish reaction and vice versa.Eventually the market will return to the trend, but until then, it is difficult and risky to act.
Also keep in mind that a trader can not always protect his / her account with stop-loss orders during the news. When there is no liquidity on the market, the order does not close. The order remains open until the first available counterparty is willing to act. You want to have a strategy that is based on prices on which you are willing to act and to open and close your orders.
Fundamental analysis is the process by which you try to determine the underlying value by making predictions based on available data and statistics. In this article we look at several important economic indicators that play a role in fundamental analysis.
Gross national product (GNP)
The GNP is the total added value of a country or economic zone. The added value is determined by adding the total market value of all goods and services within a certain region. That way you have a nice picture of the economic health of a country.
GNP indicates what has happened within a zone in the past period. It is therefore wise to focus primarily on the preliminary predictions that usually come out a month before the final figures. If the final figures ultimately deviate from the provisional reports, this will cause the price to move significantly.
Consumer price index (CPI)
The CPI indicates the price development of goods and services within a given country. The consumer price index is determined by studying the price developments of a basket of goods and services purchased by an average household within the country or zone.
The CPI can be used to make predictions about interest rates . A high CPI is an indication of the presence of strong inflation with rising interest rates as a result. By achieving a higher return on currency with a high interest rate, the demand for that currency will increase, which will drive up the price.
Employment is extremely important for stability within a zone. When one works, one has more money to spend so that production is maintained. In the event of high unemployment, many people have little to spend, as a result of which the overall production will fall further: the zone will then end up in a downturn. A high unemployment rate obviously has a negative effect on the price of the currency in question.
The retail sales figures come out every month. Because season correction has been applied, this is a very strong indicator of the power of consumer spending. By interpreting the retail sales figures correctly, it is possible to predict other delayed indicators such as the GNP and the CPI.This indicator can therefore be used well to estimate the future direction of the economy.
Balance of payment
The balance of payments gives an overview of all imports and exports with other countries. There is a surplus when there is more export than import, there is more demand for the currency of the zone which will cause the price to rise. When there is a shortage, however, more is imported than is exported, the price will decrease because there is more demand for other currencies and less for the currency of the own zone.
Tax and monetary policy of the government
By manipulating various economic instruments (tax legislation, interest rates and import tariffs), the government can try to maintain stability within its own zone. Many measures taken by the government have a major influence on the exchange rate of the currency. For example, if the government makes borrowing tax-unattractive, foreign companies will invest less within the country, causing the demand for the currency and hence the price to fall.
The interest rate as determined by the central bank within a zone (eg ECB, FED) has a major impact on the demand for certain currencies. When the interest rate rises, money yields more and the demand for the currency in question will increase. By taking into account the different economic indicators it is possible to predict what the central bank will do. In the event of a high inflation rate, the central bank will, for example, increase the interest rate to stop spending.
Apply fundamental analysis
When you start trading in Forex on the basis of fundamental analysis, it is important that you know how the economy is structured globally. When you know how the various indicators are connected, you can make predictions and thus greatly increase the chance of a successful trade.
What is the reality of Forex Trading. Unique Reasons
Doing forex trading yourself is nonsense, you will (almost) guaranteed fail. I'm sorry, but making money in the foreign exchange is simply not going to work. 99% fails.
Do not get me wrong. Maybe you are very intelligent or do you have a genius technique. But there are secret rules and invisible walls whose chance is simply extremely small that you would ever break it.
Most people who start with forex stop within a very short time, this has a good reason.
In this article I tell you exactly why 99% fails, and why you would fail. Finally, I tell you how the last 1%, does earn money with forex.
Content of this article
- How do I get my Forex knowledge?
- Bizarrely high profits, the richest people in the world and forex
- Daytrading and its costs: Casino always wins
- The myth that forex is cheaper
- Forex day trading goes with higher profits but also higher losses
- The siege world is dominated by professionals
- You can not beat the professionals
- The higher the target return, the higher the risk
- The danger of using a lever (leverage) as a beginner
- The dangerous of being "unlikely" trade's as beginner
- Heads or tails?
- The stressful of self-forex trading
- A realistic forex method that works (that's how you can hear the 1%)
- Way # 1 to belong to 1%:
- Way # 2 to belong to 1%:
How do I get my Forex knowledge?
Read, read and read again. I have read about research and research into the opinions of the greatest gurus. Looked at gurus in the siege world. My marketing background used to analyze the marketing of forex brokers.
I have had forex experience for five years and last of all I used a lot of my common sense for this article.
Bizarrely high profits, the richest people in the world and forex
Let me start with a conclusion where I have come up with my common sense.
Once upon a time there were two of my friends who heard about forex traders that achieved huge returns. They themselves started and also achieved high returns in a short time. They were lyrical about their new way of earning money. I was skeptical.
I was disturbed, I was an idiot and the chance of my life I let go. At least, that was what I was told.
That they achieved 20% per month return sounded to me simply too good to be true. This was my counter-argument. I said: How is it possible that people can achieve so much profit with forex, but that there is nobody in the forbes500 government list that has accumulated wealth with forex trading?
That is how your assets would look like if you trade for 8 years with a start-up investment of € 10,000
- Year 1: 10,000 euros will be 30,000
- Year 2: 30,000 euros will be 90,000
- Year 3: 90,000 will be 270,000
- Year 4: 270,000 will be 810,000 euros
- Year 5: 810,000 euros will be 2.4 million.
- Year 6: 2.4 million becomes 7.2
- Year 7: 7.2 million will be 21.6 million
- year 8: 21.6 million will be 64.8 million
Here a picture that my business partner wanted to share to emphasize the bizarity of the above facts:
The above simple calculation says that the bizarrely high returns that are promised with forex should mean that you would belong to the 500 richest in the Netherlands within 8 years . I have gone through the entire Quote 500 (Dutch top rich list), there is no one who has amassed his fortune with forex.
This does not mean that you can not get rich with forex, it does not say that there are no millionaires by forex, or that people have not partially made their money with forex, it says that it is heavily exaggerated how much you can earn with forex.
Let me say that the richest and most successful investor in the world (warren buffet) does not disapprove of forex. His experiences with forex are scarce for a reason (even though they were successful). But they are there and these trades were all focused on the long term.
For me it says a lot that the richest investors in the world do little forex trading. It tells me a lot that they have never done daytrading.
In the end I got myself over to also do forex trading. Fortunately, I did not lose as much money as my friends. Nowadays I make a profit with forex. Not the bizarre high profits that are promised but enough to be happy, more than I do with stocks.
Daytrading and its costs: Casino always wins
Day trading is selling the currency or a stock you bought within a day.
When it comes to forex, it usually concerns forex day trading.
And I'm not saying that it's gambling, but it does have a lot of it. Just as with poker, there are people who win big numbers time after time, here it is a fact that they are so good that they are no longer gambling.
This is how it works with forex. That does not mean that statistically the odds are that you will lose money. It is true that sometimes you and sometimes another trader wins money, but that your forex broker ALWAYS wins money. You always pay to your forex broker, whether or not you win, they always win.
The myth that forex is cheaper
You often hear from people that forex trading is cheaper. That is only the case if you look at it in a certain way.
It is true that you usually pay less per purchase or sale than you do with a share. Only almost everyone who does the currency trading (forex) does day trading. An investor in shares usually does that once every few months, per year, or years. A forex trader often buys and sells the same day.
Because of the above, forex trading you will therefore spend a lot more on your broker than on other forms of investing. So much that if you do not know what you are doing, you probably lose your money.
Forex can be cheaper. But that is only true if you hold a trade long, and are not a day trader, as warren is not a day trader.
Forex day trading goes with higher profits but also higher losses
The profit and loss of a day trader is much more volatile than with other types of investment.
This does not mean that it does not work. But it does mean that you can take a lot of profit for a short time, and then you can lose everything in a short time.
The siege world is dominated by professionals
With forex it is so that if you make money, someone else loses it. Or that both of you are losing money because of the costs.
The best forex traders work for funds. It is not that if you add up all the forex traders, and grab the average, you can say what your average forex opponent is. You can be better than most forex traders but still lose a lot of money.
The professional forex traders play with much and much more money than an amateur. This means that if, for example, three large professionals bet 90,000 euros on the idea that the dollar goes up or down, there may be ten amateurs who jointly bet € 10,000.
So € 100,000 is being used by 13 traders.
Since the professionals use 90% in this trade, it means that you take up 90% against professionals , not against all amateurs who play along.
Let's be realistic, what is the chance that you as an amateur are better than the professionals?
You can not beat the professionals
Consider the following
- Do you have as many years of experience as these traders?
- Have you followed as many courses in forex trading?
- Do you know as many traders to gather the latest insights?
- Are you literally trading all day long, all week long?
- Is there a big company behind you that always supports you to get the right information and help you make better decisions?
If you can not answer YES to ALL these questions, then I can guarantee that your chances are smaller than a penguin wanting to fertilize a tiger .
I also disregard the fact that the companies that hire forex traders only accept the smartest people. It's about a lot of money, they do not want to lose it, they do not play games.
What I also disregard is whether or not you have the "guts" to do it. Can you sleep well if you have all of your currency in the currency, which you know is going on at night, and you know you can lose everything?
Not only this, it is a fact that you will lose a lot of money, even the best traders sometimes make this happen. How do you feel when all your money seems (temporarily) to smoke, and more importantly, do you still make good decisions?
Most people do not make good decisions when a lot of money is at stake for them.Professional forex traders usually play with someone else's money, which is why they are better able not to make their emotions decisions.
Beyond all the reasons mentioned, there are probably still ways why you and I can not beat the professionals. But let me summarize it again for you. The chance is zero that you beat the professionals in the long term.
There is a way to beat the professionals without all of the above qualities, how will I tell you later in this article.
The higher the target return, the higher the risk
This applies mainly in general. There are exceptions, but in almost all cases it is true that if you aim for a high return (say% 100 growth in a year), the chance is high that you will lose money instead of winning.
The fact is that the higher yield you want to achieve, the more risk you have to take.
This can only be done in ways such as leverage or by doing an unlikely trade.
The danger of using a lever (leverage) as a beginner
Using a lever is an option where you can double the potential profit and loss, multiply it six times or even attenuate it.
This means that if you double dollar in value, you can earn two dollars instead of one dollar. Or even sixty dollars.
There are people who can do it well, because you can achieve a lot in a short time.But you can also lose a lot in a short time . I would strongly recommend not using a lever if you are a beginner. You do not want to take this risk as a beginner.
Indirectly, you borrow money from your broker when using a lever. you can not earn $ 20 if you buy your 1 dollar and he only goes up 1 dollar. The other way around, if you buy $ 20 you can theoretically not lose all your money if the $ 20 loses $ 1.Unless a lever is used, so.
Here is some more Wikipedia explanation about how a leverage (leverage) works .
It is complicated matter and in practice you do not have to worry about it. In practice, you just click on a lever button and choose "x1", "x30", "x60", or something similar.
The dangerous of being "unlikely" trade's as beginner
Usually the smaller the chance of success is that a trade succeeds, the greater the loot if it succeeds.
If many people do not value a coin, then it is also worth little. If almost everyone estimated the currency low and suddenly it turns out to be a good currency, then it is possible that everyone suddenly starts buying, which increases the value of the currency. If you were the only one who believed that the currency would rise (and buy) to the point that no one had any faith in it, then you are the one who benefits most from the increase.
I hope I explain it a bit clearly, but it simply means that the most improbable scenarios give people the most . You can earn a lot if you always speculate properly, but the risk is very high, because there are always reasons that the other traders (and especially the professionals) move in a certain direction.
Who are you as an amateur to estimate that a coin should or should not be of higher value if professionals say otherwise?
I can not recommend doing unlikely trade's as a beginner.
In order to make huge profits, all eggs are often placed in one basket (all your money on 1 trade). I personally think that is not a sensible plan, especially not as a beginner.
Heads or tails?
As a beginner with a lever play or bet on unlikely is just like head or coin.
What if you had a euro coin, and every time you threw it you had the chance to win one euro extra, or lose one euro.
- cup = win one euro,
- currency = lose one euro
Every time you throw the coin you pay one cent to participate.
What if you had a euro coin, and every time you threw it you had the chance to triple your money, or lose everything.
- head = tripling your money,
- currency = lose everything?
Would you do it?
You can be lucky twice and make a lot of money. But the chances are that soon your coin will end up wrong, and then you will lose everything:
Make sure you know what you are doing, or leave the risk to the experts.
Read more about investing for beginners here .
The stressful of self-forex trading
In addition to the fact that the methods just described are not sensible to try as a beginner, I can also tell you that it can be very stressful.
Did not you want to become a forex trader to improve your life? Forex trading is hard work and money is constantly at stake.
Apart from the question whether it is realistic to expect that you beat professionals you can ask yourself whether you have the energy, pain and other things to try . I say try because statistically the odds are the greatest you lose. Even many professionals lose, because even the professionals play against even larger professionals who have more money to spend than they do.
A realistic forex method that works (that's how you can hear the 1%)
I hope that I have made you understand that the chance is small that you will succeed in becoming successful with forex trading. I say that 99% of the people who start to forex lose their money, but I also say that there is one percent that can earn a lot of money.
There are two ways to belong to 1%:
Way # 1 to belong to 1%:
Working working working working working working working.
You will have to read your drowsiness, meet experts, lose a lot of money and spend many years to be able to measure yourself to the professionals. The chances are that when you do all these things, you fail because you are simply not financially smart enough, or because you do not have the personality of a successful forex trader.
If you want to trade yourself (and do not want to use the way below) I recommendiForex , they also support the Dutch market.
This is a way, but it is certainly not an easy way and you run the risk of losing all your money. This is the reason why I finally opted for the following method.
Way # 2 to belong to 1%:
Copy literally one on one the actions of the most successful professionals. This is what I have chosen to do.
These professionals usually do not earn as much as the unrealistically high amounts such as 200% per year. But you do see a lot in that 60% per year in return.
There is a system that lets you do this one-on-one. Automatically, you do not have to worry about it. You know that you can benefit from the highest possible returns possible in the forex world without stress or time.
The system sees real time what traders buy and sell. You can set that, for example, you follow a trader with 1000 euro. If he bets 1% on a coin, the system ensures that you also automatically use 1% of your investment. You can also distribute your money and copy / follow different traders 1 to 1.
You can arrange all traders in the way you are interested. Do you want to copy a trader that has achieved high returns for a long time ? You can sort on this. Do you want to copy the forex trader this year the highest returns, this is possible. You can also follow both traders. It may be useful to follow multiple traders if you want to follow different approaches to spread your opportunities.
Besides forex traders, you can also follow raw material and share traders on this website. I recommend not to immediately follow a trader with € 10,000. But with € 500. With € 500 it can make a difference.
I would say try it out, and let the system prove itself how effective it is.
Click below to start, registration is free: