For traders who are chasing their dream of becoming a full time Forex trader , or at least trying to achieve even part time trading success; this statement can be a bit of a demotivator. In this article I want to do some investigating. According to a Reuters article in , the China Banking Regulatory Commission banned banks from offering Forex margin trading to their clients. If you want to read the full article you will have to pay for it, but the abstract reads as follows:.
The results show that about twice as many day traders lose money as make money. Approximately 20 percent of sample day traders were more than marginally profitable. We found evidence that day-trader profitability is related to movements in the Nasdaq Composite Index.
All this really does is support our own views on day trading. Using data from the Taiwanese Stock Exchange, the performance of day traders over the 15 year period was evaluated.
Commodity Futures Trading Commission CFTC introduced new regulation in October forcing US brokers to lower the amount of leverage that can be offered to customers maximum limits are US forex brokers are now also forced to disclose the percentage of active forex accounts that are actually profitable. The new CFTC disclosure requirements are certainly a step in the right direction towards greater transparency in the Forex industry. However, it is important to treat the percentage figures of winning and losing accounts with a degree of skepticism for the following reasons we just stated.
All of the brokers will be eager to present themselves in the best possible light — so it would not be too surprising if the figures were subject to some manipulation. If a broker can claim to have a higher percentage of winning accounts than their rivals, this may attract new customers to open up accounts with them.
The CFTC quickly put their foot down and 6 months later we see that the percentage of winning accounts at Oanda has dropped to As disclosure requirements tighten in the future, these winning percentages are expected to fall even further. This is no surprise to us though, we know day trading is a really stressful and tiring way to approach the market.
Day traders are required to sit in front of the computer for hours on end, staring at price charts while waiting for an intraday trade opportunity to present itself. Most of the day trades are placed with the intention of quickly being in and out of the market over a span of a few hours. This combination of high frequency trading , and staring at charts all day is very psychologically taxing.
Most day traders are failing because their patience wears too thin. They begin to do silly things in the market out of boredom, fatigue or frustration. Swing traders like us, use the core movements from the higher time frames to take easy, longer term trades. Swing traders ride out the dominant market direction it much stress-less fashion. This gives us the freedom to set our trades, and not have the burden of constantly monitoring them for hours.
The idea is to be less involved with the market as a whole. All of the anecdotal and hard evidence examined in this article strongly suggests that Forex traders lose money and the vast majority of traders are not profitable.
So how can we as traders avoid being one of the losing statistics. When you read through that list, how many points are you guilty of? I would bet at least a few. These are everyday issues which traders struggle with and really do hinder their progress of becoming a profitable trader.
Most of the problems are generally a result of psychological weakness. Unfortunately most traders never build on the character and psychological traits needed to fight these inner temptations. You really need step up, and work on personal improvement to build what it takes to be a good trader.
The market will rip you apart, psychologically, in ways you never thought possible. The financial sector is a cruel world which can easily reduce a grown man to tears. Do yourself a favor and go back through your history and study your losing trades. Get a pen and paper and make a list of what you think you did wrong when executing each of those losing trades. I bet you will see a common problem reoccurring on that list.
Have that list in front of you when you go to take your next trade. Hopefully that it will deter you from making the same mistake again. Give yourself a higher chance of not becoming a fatal statistic. You maybe be interested in our end of day price action strategies.
Stop by the war room information page and check out our price action course details. If you want to read the full article you will have to pay for it, but the abstract reads as follows: The following quote on page 13 is particularly relevant: Michael Greenberg of Forex Magnates has compiled the data for the first quarter of The chart only shows a handful of US brokers. Best of luck to you on your trading journey. I agree with all your points above, I've dabbled in day trading on and over the last few years without much profit and make many of the mistakes you mentioned.
Been also following a eurusd blog who highlights the same things in eurusdtradersam and a combination of his points and yours have definitely given me lots of things to consider and implement. The key thing is changing the mentality from day trading which for many, myself included, is more of a hobby than an actual investment strategy which generates a long term return.
Its a hard game in the world. Its true that vast majority loses money. Why are you among them? Be self confident and try again and again. If you fail for months together, I suggest to stop and skip it. Its not suitable for all. It doesn't mean that you are worthless. You have proper knowledge in other subjects. The human being made the world much sweeter and better but not Forex traders. Look for another job. I was a looser for one year and never have left it. Now I am a happy trader.
I don't know I am successful or not but earn a lot. Data from french financial authority from late in english, you're welcome http: I guess i am a forex daytrader. My equity is pointing up. I've chronicled my development publicly, find me on Twitter as a starting point. It is indeed very hard, very taxing physically from sitting for so long and mentally.
There is absolutely no doubt in my mind that I will "make it" live from it and more , sooner rather than later. I've worked hard and smart, newbies such as family and friends and pros alike encourage me given my progress. Time and the compounding effect will take care of the rest. My time appears to be approaching.
Blown first live account too ignorant and trigger-happy: Now positive consistency being observed after almost blown second series demo accounts. Currently short-listing forex brokers to go live.More...