The Truth About Day Trading

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Volatility, What is it good for?


Can we succeed at trading without volatility?


The reality of trading is that traders, whether they are professional or retail, can only make money when markets are moving. The only beneficiary of markets that don’t move are brokers who are financially grateful to those traders that stupidly believe the adage of “you got to be in it to win it”.

So why do we day trade?

Retail traders get sold a lie that they can make money every day in the markets. Those that try will suffer the transfer of wealth from their person to grateful brokers and their introducers.

It is time for some honesty as to how trading and markets get sold to the public.

I do not blame brokers. I want the lies about how you can make a substantial monthly income from day trading to stop. If the volatility stops, so does the chance for a profit. So stop trading and wait for the return of volatility.

I thought about this over the last few days post-NFP, but pre US CPI sitting, thinking of trades to do, in uninspiring ranges of 30 or 40 pips, looking at platform, charts and news pages.

Every trade we do in a market with low volatility will not find the sweet spot and hit our target. It might go in the right direction for 10 or 20 pips but it nearly always fades and drifts as markets lack volatility and traders lack conviction.

If we want to trade like a professional, we must learn to wait.

I am sure that we won’t have long to wait until markets start to move.

Until then do, take some time to see if you can find some key areas on a chart that would be attractive entry points for bullish and bearish outcomes.

It is not realistic to think that anyone can predict the exact direction of the market. But, it is prudent to plan for all eventuality.

As a former professional trader, I was in the foreign exchange market for 20 years. I can tell you that you need preparation, a trading education, patience and a strong mind.

To prepare, you must try to see the possibilities of price movement with trends, news headlines and data releases.

You need to get a forex trading education that is more than just technical analysis that tells you to buy here or to sell there.

You learn to see the market forming tops and bottoms that provide areas of support and resistance. You need to understand fundamentals and forward-thinking of what is to come in the future to drive longer-term trends.

You must have plenty of patience and restraint not to get sucked into overtrading and acting on impulse or highly leveraged revenge trades. Trade only when the market is showing you the correct direction when the fundamentals and technical analysis line up together.

You need the strength of mind to follow your chosen strategy, but not be so inflexible that you cannot see when you are just plain wrong.

We talk of risk management for a reason because it controls your impulses to run losing positions for far too long. Just remember it is ok to lose a little and often, provided that you run your winning trades, not to the max but well into profitability and your financial satisfaction.

Please, please do not learn how to trade from anyone that says you can win every day. They only want your volume. If your educator claims to be a professional trader in the past, ask them to prove it. If they can’t, he is a retail trader that is as qualified as anyone you might meet in the street.

The definition of a professional trader is someone who has worked making markets or managing money in a financial institution. They will have been approved and regulated by the authorities.

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