In our last lesson we finished up our discussion on big picture fundamentals with a look at the Conference Board’s Index of Leading Economic Indicators. In today’s lesson we are going to start a new series of lessons which is meant to tie everything together that we have learned up to this point starting with an explanation of the different types of traders.
While there are many different styles of trading most if not all styles can be categorized in to one of three broad categories which are: Day Trading, Swing Trading, and Trend Trading.
According to data on the number of searches for each of the above categories, Day Trading is by far the most popular type of trading so we will start by analyzing the advantages and disadvantages of this type of trading.
The definition of a day trader is a trader who typically completes both the purchase and the sale of a financial instrument within a single trading day. One of the biggest advantages that I think most traders would site about day trading is that since the trade is closed out before the end of the trading day you do not have overnight exposure. This is an especially important point in the stock and futures markets where it is difficult or in some cases not possible to close a position after normal trading hours.
As many of you already know, the difference between the close of the previous day and the open of the next day can be large if a major event happens outside of trading hours. This puts non day traders who hold positions overnight into a somewhat risky position where they could be forced to take a much larger loss than they otherwise would have.
The second big advantage that I think many traders would site is that good day traders are more nimble, as they move in and out of the markets quickly seeking trades with a high success rate and cutting their losses quickly. This allows them to take advantage of more opportunities than are available to longer term traders.
The biggest disadvantage that I think most traders would site about day trading is the greater transaction costs that are involved. Very simply, because day trader’s trade more they generate more commissions and pay the spread a greater number of times. As their transaction costs are higher they must generate greater profits than strategies which do not generate as much in transaction costs, all else being equal.
The second disadvantage to day trading that I think many traders would site is the amount of resources that are required in relation to longer term methods of trading. This is true from a time, concentration, and technology standpoint as in general day traders spend more time in front of the screen, have to have more concentration, and more technology such as high powered charts and news feeds than longer term traders do.
So with all this in mind why is it that day trading is by far the most popular type of trading? One reason in my opinion is the advantages that I have listed above which are very appealing to many professional traders. Unfortunately however my opinion is that the bigger reason is that day trading allows people who have gambling tendencies to get the biggest gambling fix so to speak from the market.
As we have discussed in our series on the psychology of trading this is not a healthy reason to trade and is one of the major reasons why the large majority of day traders fail.
That’s our lesson for today. In tomorrow’s lesson we are going to look at the second most popular style of trading, swing trading, so we hope to see you in that lesson.
Actionable trading levels delivered to YOUR charts in real-time.
Mon 3 Dec 2018 A All Day Final Mfg PMIs Tue 4 Dec 2018 A 04:30 AU- Reserve Bank Decision Wed 5 Dec 2018 A All Day Final SVC PMIs A 04:30 AU- CPI A 13:15 US- ADP Jobs A 13:30 US- Productivity A 15:00 CA- Bank Of Canada Decision A 15:30 US- EIA Crude B 19:00 US- Beige Book Thu 6 Dec 2018 AA 12:45 EZ- ECB Decision AA 13:30 US/CA- Trade A 13:30 US- Weekly Jobless Fri 7 Dec 2018 A 10:00 EZ- GDP AA 13:30 US/CA- Employment A 15:00 US- Final Univ of Michigan
Global-View Affiliate Program
We are starting an affiliate program to market some of our products.
Send me an email if you would be interested or if you know someone who would like to be an affiliate. Generous commissions payout for those accepted.
Put the word "affiliate" in the email subject line.
Veteran FX Trader, Max McKegg, forecasts all the Major currencies and the Australasians; providing Daily and Medium Term Trading forecasts to subscribers, who include large Banks the world over, as well as individual traders in more than 30 different countries.
looking for your first broker or do you need of a new one? There are
more critical things to consider than you might have thought.
We were trading long before there were online brokers. Global-View
has been directly involved with the industry since its infancy. We've
seen everything and are up-to-data with recent regulatory changes.
The Global-View Forex Forum is the hub for currency trading on the web. Founded in 1996, it was the original forex forum and is still the place where forex traders around the globe come 24/7 looking for currency trading ideas, breaking forex news, fx trading rumors, fx flows and more. This is where you can find a full suite of forex trading tools, including a complete fx database, forex chart points, live currency rates, and live fx charts. In addition, there is a forex brokers directory where you can compare forex brokers. There is also a forex brokers hotline where you can ask for help choosing a forex broker that meets your individual fx trading needs. Interact on the same venue to discuss forex trading.
The forex forum is where traders come to discuss the forex market. It is one of the few places where forex traders of all levels of experience, from novice to professionals, interact on the same venue to discuss forex trading. There is also the GVI Forex, which is a private subscription service where professional and experienced currency traders meet in a private forex forum. it is like a virtual forex trading room. This is open to forex traders of all levels of experience to view but only experienced currency tradingprofessionals can post.
Currency trading charts are updated daily using the forex trading ranges posted in the Global-View forex database. You will also find technical indicators on the fx trading charts, e.g. moving averages for currencies such as the EURUSD. This is another forex trading tool provided by Global-View.com.
The forex database can be used to access high, low, close daily forex ranges for key currency pairs, such as the EURUSD, USDJPY, USDCHF, GBPUSD, USDCAD, AUD, NZD and major crosses, including EURJPY, EURGBP, EURCHF, GBPJPY, GBPCHF and CHFJPY. Data for these currency trading pairs dating back to January 1, 1999 can be downloaded to an Excel spreadsheet.
Forex chart points are in a currency trading table that includes; latest fx tradinghigh-low-close range, Bollinger Bands, Fibonacci retracement levels, daily forex pivot points support and resistance levels, average daily forex range, MACD for the different currency trading pairs. You can look on the forex forum for updates when one of the fx trading tools is updated.
Global-View also offers a full fx trading chart gallery that includes fx pairs, such as the EURUSD, commodities, stocks and bonds. In a fx trading world where markets are integrated, the chart gallery is a valuable trading tool. Look for updates on the Forex Forum when the chart gallery is updated.
Global-View.com also offers a forex blog, where articles of interest for currency trading are posted throughout the day. The forex blog articles come from outside sources, including forex brokers research as well as from the professionals at Global-View.com. This forex blog includes the Daily Forex View, Market Chatter and technical forex blog updates. In additional to its real time forex forum, there are also Member Forums available for more in depth forex trading discussions.
WARNING: FOREIGN EXCHANGE TRADING AND INVESTMENT IN DERIVATIVES
CAN BE VERY SPECULATIVE AND MAY RESULT IN LOSSES AS WELL AS PROFITS. FOREIGN
EXCHANGE AND DERIVATIVES TRADING IS NOT SUITABLE FOR MANY MEMBERS OF THE
PUBLIC AND ONLY RISK CAPITAL SHOULD BE APPLIED. THE WEBSITE DOES NOT TAKE
INTO ACCOUNT SPECIAL INVESTMENT GOALS, THE FINANCIAL SITUATION OR SPECIFIC
REQUIREMENTS OF INDIVIDUAL USERS. YOU SHOULD CAREFULLY CONSIDER YOUR FINANCIAL
SITUATION AND CONSULT YOUR FINANCIAL ADVISORS AS TO THE SUITABILITY TO YOUR
SITUATION PRIOR TO MAKING ANY INVESTMENT OR ENTERING INTO ANY TRANSACTIONS.