| Most people who are interested in Forex trading are | | | | starts moving I will cross check other currencies to |
| ordinary folks with no prior training or experience in | | | | try and figure out what is happening, but I don't |
| short-term trading, that unfortunately are being sold | | | | trade them. By only watching one pair at regular |
| a bill of goods. Late night infomercials irresponsibly | | | | hours you develop a feel for the trading action and |
| tote Forex trading itself as the Holy Grail, and show | | | | can tell when conditions are strange. |
| clips of testimonials from a few lucky people who | | | | There are really only two ways to day trade: |
| made some atypical trades. "I made $800 this | | | | Continuation or Reversal. Continuation includes |
| morning before going to work," "I cleared $3,000 my | | | | breakouts and trends, while Reversal concentrates |
| first week, part-time," that kind of junk. | | | | on trading ranges at the edges, betting against a |
| These infomercials employ a two-step process to | | | | breakout. Which hours you trade should dictate which |
| jam an expensive product of questionable worth | | | | style is best suited for you. If you want to trade |
| down your throat. Usually it's a piece of software | | | | during the most active hours you probably want to |
| that has arrows which light up red or green, and | | | | look for breakouts and try to ride trends. If you are |
| when all four of them light up green you enter your | | | | working the quieter hours then fading the edge of |
| position. Simple, huh? The software costs about | | | | the range is a higher-probability setup. Either way, |
| $3,000. But they don't tell you that up front - the | | | | success comes from employing proper risk vs. |
| television bit just invites you to a free seminar full of | | | | reward analysis, which means setting your stops and |
| happy, excited people. At the seminar they fill your | | | | profit targets in the right places. |
| head full of dreams and make the price tag seem like | | | | Personally I trade the after-hours EUR/USD market. |
| a fraction of your first month's profits. You feel like | | | | It's what I like. Also, it's what's practical for me |
| you are really missing out if you don't join the crowd | | | | because I live on the west coast of the USA. So I |
| and get in line to buy. | | | | am only watching the market during the Asia trading |
| While there is some merit to the four arrows all | | | | period, no other markets are open. And I am looking |
| lighting green, which indicates that the price trend is | | | | for trading ranges, particularly double-tops and |
| all in one direction over several different time-frames, | | | | double-bottoms at prior support and resistance levels. |
| blindly following it is a horrible system. You cannot | | | | I usually get off 5 good trades per week and win 3 |
| rightly call yourself a trader if this is your approach. | | | | of them, with a win of about 1.5 times my average |
| You are just a monkey pushing buttons. Don't plan on | | | | loss. So it's a good methodology because |
| making any long-run profits as a monkey - maybe a | | | | 1.5+1.5+1.5-1-1 = 2.5. That's a positive number and it's |
| banana here and there, but you WILL slip on the | | | | a good one. |
| peels. Think about it - if this software could really | | | | Now, if I wanted to play breakouts and trend |
| make money like they claim (virtually on autopilot), no | | | | continuations I would only trade during the New York |
| way do they sell it. They would get much richer | | | | / London overlap period, which is between 8:00 am |
| simply using it themselves trading large positions. | | | | and 12:00 noon EST (or very early my time; I would |
| I'm not saying that daytrading Forex cannot be | | | | rather not miss out on those early morning dreams). |
| beaten. Much to the contrary, I trade the EUR/USD | | | | This is the time where those types of trades have |
| successfully intraday. You probably can too. But avoid | | | | the best odds of working out for this pair. |
| purchasing an expensive system. In fact, I | | | | The most important part of any trading system is to |
| recommend avoiding mechanical systems altogether. | | | | have a methodology, stick to it, get good at it, and |
| All you need is some basic trader training in the way | | | | make it work for you. If you aren't disciplined enough |
| of technical analysis, some idea of a solid approach, | | | | to stick to your trading ideals, then you would be |
| and a little experience watching the markets to get a | | | | better off being a monkey pushing buttons when the |
| feel for them. | | | | lights all turn green, as your losses will probably be |
| It's probably best to concentrate on one pair. That's | | | | smaller. |
| what I do, just the EUR/USD. Sometimes if it really | | | | |