Day Trading Success - Dealing With Volatility is Essential to Succeed


by Sacha Tarkovsky - Date: 2007-03-22 - Word Count: 361 Share This!

If you want day trading success you need to be able to deal with volatility and determine where prices will move within the day.

If you can't do this then you will never achieve long term day trading success.

So how do you deal with volatility? Lets look first at what causes it.

The volatility in any daily session is caused by the participants and these include millions of different traders in several groups:

1. Central Banks - Generally intervene form time to time to stabilize currency movements.

2. Hedgers - Looking simply to hedge risk.

3. Large speculators or funds - Looking to make money for themselves or their clients.

4. Small speculators - Everyone else.

The above participants all have different ways of trading and represent diverse investment objectives.

The vast majority are not concerned about daily or hourly volatility and these levels are not considered significant but by a small minority day traders.

The snap shot of a day is too small for anyone to judge where volatility will take prices.

Most traders are not interested in it volatility in a daily time frame is random.

Day traders who look at support, resistance or ranges in a day to trade are using meaningless data which is not valid and that's why they lose.

If you are trying to day trade you simply cannot measure where volatility will take prices and this is obvious to every trader but not day traders.

They think they can achieve day trading success but their quest is doomed to failure.

The test

You will see lots of day traders on the net and talking about making regular money monthly or trading with 70% accuracy but this is simply nonsense.

Ask any day trader for a real time track record of consistent profits over the long term and you won't get one.

You will probably get a hypothetical track record however that's done in hindsight, let's see - could I make a profit knowing the closing prices?

Umm think I might!

If you want to trade you need to have the odds on your side and day trading does not do this and that's why no one wins longer term.


Related Tags: forex systems, forex strategy, forex day trading, day trading success, succesful forex trading

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