Day Trade Forex – Have You Got What It Takes?

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The forex marker is often seen as an attractive alternative to the stock market, a market that provides more opportunity for profit. In fact the forex market does provide more opportunity because it’s a more technical market than the stock market is, and one can trade it using the charts alone. With that being said, the forex market has its own inherent risks and surprises that can knock out any kind of aggressive, non patient trader, no matter how well financed they are.

If you want to day trade forex you will have to face the following:

• Sudden unexpected price movement up or down, fuelled by news, and one that is often impossible to make sense of.

• Central bank interventions. The national bank of a country can cause the market move too sharply by 600-800 pips in 2 days. This creates all sorts of illusions.

• Risk aversion due to sudden panic events, causing the dollar to surge higher without further explanation.

All these events cause traders to get stopped out and losses can pile up quickly. On the contrary however, the experienced traders have been trained to know when to expect these kind of scenarios and adjust accordingly. All traders that have been educated by older, experienced traders and have been mentored to trade wisely know about these events, so they don’t get frustrated. The uneducated trader gets killed psychologically every time he suffers such a loss and he almost thinks that maybe trading does not work, or it will not work for this month at least.

No matter what you hear about forex day trading, things like ‘it’s impossible’, or it’s ‘crazy’ or it’s just the job better left to the ‘experts’, you have to ignore all this. Sure it is about expertise but it is not some kind of expertise that’s impossible to acquire. Rather

you have to figure out how winning traders became what they are today, find out what they did, and who trained them.

I know for sure that these traders treat the forex market very seriously, not like some kind of game. They are willing to pay for a 2 year mentoring program that may cost as much as $10,000! That’s about how much you also need to become a certified pilot, and they treat it equally seriously, because they know trading is a serious business. And forex day trading is an even more serious business where there is no halfway success!

So is it possible? When these people ask you again, you have to tell them the paradoxical truth; sure it’s possible to turn $20K into $200K or a million, yet it is impossible to turn $1,000 into $5,000. A trader with only $1,000 cannot afford the $5,000/year training unless he takes out a loan, and as an untrained trader he will fail while wasting his time trading. The $20,000 trader has a very realistic chance to make one million dollars in less than 2 years, even if he borrowed that $20,000 from the bank and spent $5,000 per year to day trade forex, he still can make it with only a small portion in his trading account, maybe $7,000, that’s all he can trade with and still reach $20,000 within 3 months.

This entry was posted on April 1, 2010 at April 1, 2010 and is filed under FX Trading. You can follow any responses to this entry through the RSS 2.0 feed.