Nearly everyone who are interested in Forex trading are common folks with no preceding training or knowledge in short-range trading, that regrettably are being sold a bill of goods. Late night advertisements foolishly tote Forex trading itself as the Holy Grail, and display clips of testaments from a few fortunate people who made some uncharacteristic trades. “I made $750 this morning before going to work,” “I cleared $2,500 my first week, part-time,” that kind of scrap.

Forex day trading system

These advertisements utilize a two-step procedure to shove a costly product of doubtful worth down your throat. As a rule it’s a piece of software that has arrows which light up red or green, and when all four of them light up green you enter your position. Easy, huh? The software prices around $3,000. But they don’t tell you that up front – the television bit just invites you to a free seminar full of happy, excited people. At the seminar they fill your head full of dreams and make the price tag seem like a fraction of your first month’s incomes. You feel like you are really missing out if you don’t join the crowd and get in line to buy.

Forex day trading system

While there is several advantage to the four arrows all lighting green, which designates that the price trend is all in one direction over several different time-frames, blindly following it is a nasty system. You cannot accurately label yourself a trader if this is your approach. You are just a monkey pushing buttons. Don’t plan on making any long-run profits as a monkey – maybe a banana here and there, but you WILL slip on the peels. Mull it over – if this software could certainly make money like they declare (practically on autopilot), no way do they sell it. They would get much richer just using it themselves trading large positions.

Forex day trading system

I’m not saying that day trading Forex cannot be beaten. Much to the contrary, I trade the EUR/USD successfully intraday. You probably can too. But avoid purchasing an expensive system. In fact, I recommend avoiding mechanical systems wholly. All you need is some essential trader training in the way of technical analysis, some idea of a solid approach, and a little experience watching the markets to get a feel for them.

It’s possibly best to concentrate on one pair. That’s what I do, just the EUR/USD. Sometimes if it really starts moving I will cross check other currencies to try and figure out what is happening, but I don’t trade them. By only watching one pair at regular hours you develop a feel for the trading action and can tell when conditions are strange.

Forex day trading system

There are really only two ways to day trade: Continuation or Reversal. Continuation includes breakouts and trends, while Reversal concentrates on trading ranges at the edges, betting against a breakout. Which hours you trade should dictate which style is best suited for you. If you want to trade during the most active hours you probably want to look for breakouts and try to ride trends. If you are working the quieter hours then fading the edge of the range is a higher-probability setup. Either way, success comes from employing proper risk vs. reward analysis, which means setting your stops and profit targets in the right places.

Personally I trade the after-hours EUR/USD market. It’s what I like. Also, it’s what’s practical for me because I live on the west coast of the USA. So I am only watching the market during the Asia trading period, no other markets are open. And I am looking for trading ranges, particularly double-tops and double-bottoms at prior support and resistance levels. I usually get off 5 good trades per week and win 3 of them, with a win of about 1.5 times my average loss. So it’s a good methodology because 1.5+1.5+1.5-1-1 = 2.5. That’s a positive number and it’s a good one.

Forex day trading system

Now, if I wanted to play breakouts and trend continuations I would only trade during the New York / London overlap period, which is between 8:00 am and 12:00 noon EST (or very early my time; I would rather not miss out on those early morning dreams). This is the time where those types of trades have the best odds of working out for this pair.

The most important part of any trading system is to have a methodology, stick to it, get good at it, and make it work for you. If you aren’t disciplined enough to stick to your trading ideals, then you would be better off being a monkey pushing buttons when the lights all turn green, as your losses will probably be smaller.

Forex day trading system

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