To be successful in the forex market you do not have to day trade.
This goes against conventional thinking however lots of traders that dive into forex day trading fail and frequently wipe out their accounts. This is because of the rigors that day trading demands. Forex day traders must monitor the markets to the minute. They have to trade shorter time frame bars which mean they must make instant decisions, be always available to complete a day trade action. Day traders typically have to hunt for smaller pip moves, make more trades and are constantly at risk of being stopped out due to smaller volatility spreads. Because of this it is very difficult to trade successfully in the forex market as a day trader.
To capture longer stronger and potentially profitable trades it is far better to adopt an end of day trading method.
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This is a very common question amongst new Forex Traders. Day trading Forex is a common practice, however most people find it hard to commit or find the time to day trade because it requires you watch to the markets on a minute-to-minute basis. Day trading is more like a job rather than a way to financial freedom, I am assuming that financial freedom is the reason most people get into Forex trading. Day trading can be extremely stressful as you are required to make instant decisions in a pressured manner. This topped with the time requirement can be a deterrent for many people wishing to begin trade the Forex Market.
There is however another method that has great appeal because of the low time commitment and this method is to trade the Forex market on an end-of-day basis. Trading in this style requires a lot less of your time, it is less stressful and still offers you the profit potential that day trading does. Just as in the stock market you will have day traders and you will have traders that trade on an end of day basis. This requires them to only contribute about 20 minutes to an hour of their time a day trading. I personally am an end of day trader. I don’t want my trading to be something that consumes all of my time and increases my blood pressure.
Firstly, you will need to identify a good trading method that is specifically designed for end-of-day trading because many of the rules day traders use will not necessarily apply to the end-of-day trading technique.
If you look over the long term charts of any of the six major currency pairs you will easily be able to find long-term trends which your could have generated fantastic profit if traded on a long term basis. Day traders tend to make fast, small profits, where as end-of-day traders tend to make, larger profits.
So the answer to the original question ‘do I have to day trade the Forex market’ – the answer is NO. So don’t believe that the only way to trade Forex is to day trade. You can do just as well or even better by trading on an end-of-day basis.
Description: This video describes how you can use the relative strength index to trade the forex market. For more information, videos, and articles, please visit www.forexacademy101.com.
In this must see DVD for beginning through intermediate traders Doc Brown covers diverse topics pertinent to trading Forex (aka Foreign Exchange, Currency, Currency Futures). Topics range from basic money management through advanced technical and fundamental analysis. Watch this DVD and ramp up your odds of beating the market! —”Dr. Scott Brown is one of the sharpest guys I know.”-Alex Green, Oxford Club and Investment U Chairman—”Again thank you for your leadership and mentorship! I am excited but cautious as I prepare for live trading again and your course has been exactly what I needed to get going again. Thanks again Doc Brown!”David, Washington DC—”It’s been a while since I’ve pestered you, so I figure now is a good time. I wanted to tell you that I’m really impressed by your Futures and Forex Course.”Bruce Hull, NY—Author Bio: Dr. Scott Brown holds a Ph.D. in finance from the University of South Carolina and an MBA from Thunderbird, The American Graduate School of International Management in Phoenix, Arizona, ranked #1 by the U.S. News and World Report. His doctoral dissertation in futures trading attracted the interest and sponsorship of the Chicago Board of Trade. He is a 15 year veteran of the futures, forex, and options markets. In addition to leading up the Trade Mentors team Dr. Brown is a professor of finance at the University of Puerto Rico’s Graduate School of Business where he teaches doctoral and MBA investments, corporate finance, asset pricing, financial theory, and derivative trading classes. Scott is the author of the highly recognized top selling Trade Mentors core curriculum “Doc Brown’s Futures, Forex, and Options Autopilot” at TradeMentors.com He is also the creator of the best selling, most advanced, stock investing course available to the public, “Investment U’s How To Build Your Million-Dollar Portfolio From Scratch!” at InvestmentU.com.This product is manufactured on demand using DVD-R recordable media. Amazon.com’s standard return policy will apply.More>>
Forex prices are represented by pips. Pip stands for Percentage in Points. A pip is simply the minimum increment that a currency price can change. For example, if the EUR/USD price changes from 1.4690 to 1.4691, the price is said to have increased by 1 pip.
Almost all major currency pairs are priced to 4 decimals places, or 1/100th of one percent. The Japanese Yen is the exception to this, which trades only to 2 decimals points.
In an example where the US Dollar is the base currency, and the Japanese Yen is the counter currency, USD/JPY, we would see that the price will be expressed for example as 108.25
Forex pair quotes are on a bid-ask basis. The Bid price is what the market is willing to pay a seller for a currency pair. The Ask price is what the market is willing to sell a currency pair to a buyer for. The difference between the Bid and the Ask is called the spread. Forex prices are always shown with Bid price first, Ask price second.
If we look at a typical EUR/USD quote where the Bid is 1.3964 and the Ask is 1.3967 we would see that the spread for this currency pair is 3 pips.
The spread is how market makers are paid. Instead of a brokage being paid the spread is taken as commission for the trade. The spread can and will vary depending on a number of factors, including but not limited to: current market conditions, the specific broker or market maker you use (some do charge higher spreads than others), the currency pair being traded. Currency pairs that are thinly traded may have a higher spread.
Getting a Forex Trading Educationis vital before beginning to trade foreign currencies. Here at Forex Trading Education our hope is to give you some helpful insights so that you can further your of Forex Markets and knowledge and build your confidence in Forex Trading.
Forex trading takes place through major banks, market makrs, and brokerage houses around the world. These together create a marketplace for trading currencies on a near 24/7 basis.
The Forex market is almost always “open”. The market is open 24 hours a day from 5pm EST on Sunday until 4pm EST Friday. This is mainly due to the fact that the demand for currencies is in high demand. The Forex Trading Market is the largest financial network in the world with a daily turnover averaging in the trillions of dollars.
And it is continuing to grow every day as more and more traders turn to foreign currency trading as an alternative to trading stocks.
Currency trades are described in the following format: XXX/YYY. Trading foreign currency involves two currencies traded simultaneously, as a ‘pair’. An example is the EUR/USD pair, the Euro is trading against the US Dollar. Which means if a trader is ‘buying’ the Euro, they are also simultaneously ‘selling’ the US Dollar.
XXX is the first currency in the pair. This is called the ‘base’ currency. YYY is the second currency in the pair. This is known as the ‘counter’ currency in the pair. It is also sometimes referred to as the ‘term’ currency.
The base is always represented as 1, therefore the prices of the currency is then always expressed in terms of the counter currency. So if the current price of the EUR/USD pair is shown as 1.3667, the Euro being the base would be 1 so the US Dollar would equal $ 1.3667.
We have only just begun to delve into the wonders of the forex market. Over time we hope to further your forex trading education so stay tuned for the next post where we look at what a PIP is and how it relates to the forex market.
