Forex day trading can potentially be extremely rewarding. With so much volatility in the currency markets every single day there is a lot of money to be made. However it should be pointed out that day trading is certainly not for everyone.
The benefits of day trading are obvious. If you can find a profitable short term trading system then you can make lots of profitable trades every day. You can trade on gut feeling or you can apply technical indicators to short term charts such as the 1, 5 or 15 minute charts to try and identify lots of winning positions. This sounds easy but you will soon find that it is much more difficult than this.
There are many reasons why day trading is so difficult. The first is simply because you have to contend with an awful lot of noise on the short-term charts. In other words for large portions of the day you will find that the price of a particular currency will just drift aimlessly in a random fashion, which means that it is pretty much impossible to trade because there is no clear trend or direction.
Trying to come up with a trading system that is able to consistently make profits, regardless of this noise, is extremely difficult. Many forex traders are drawn to day trading because they think they have found a profitable system, but the vast majority will ultimately come unstuck and lose their money in the long run. Forex day trading requires a high degree of skill and expertise which most traders simply don't possess.
Furthermore it also requires immense discipline. Even if you do come up with a system that is profitable, you still need the discipline to stick to this system. You also need to be constantly watching the markets and reacting quickly to any price movements which may occur. This is a skill in itself, and is another reason why I generally prefer longer term trading.
If you move to longer term charts such as the 4 hour or daily charts you will find that the price movements are much slower in the overall scheme of things so you have longer to react and think about your trading positions. You will also find that technical indicators are much more dependable on these time frames because they eliminate a lot of the short term noise.
Don't get me wrong, forex day trading can still be profitable, and I sometimes trade the 5 minute charts myself occasionally when a good set-up occurs, but generally I find longer term trading to be much more profitable than day trading.
Author Resource:-
Click here to read a review of FAP Turbo and to discover lots of free tips and strategies relating to forex currency trading including the exact 4 hour trading strategy that James Woolley uses to trade the markets.
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