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Product Description
Discover a variety of technical and fundamental profit-making strategies for trading the currency market with the Second Edition of Day Trading and Swing Trading the Currency Market. In this book, Kathy Lien–Director of Currency Research for one of the most popular Forex providers in the world–describes everything from time-tested technical and fundamental strategies you can use to compete with bank traders to a host of more fundamentally-oriented strategies inv… More >>

Day Trading and Swing Trading the Currency Market: Technical and Fundamental Strategies to Profit from Market Moves

Be honest, now. Back in ’99 when seemingly every waiter and grocery-store clerk had a stock portfolio, did you get rich day trading? Back in those good old days there was plenty of talk about making money day trading, but how many people do you know who actually accomplished it? One look at a 10 year Nasdaq chart leaves no doubt that some people did get rich on the way up–and a few of them probably had the good sense to get out before it was too late. But most people ‘played’ the market–and lost–through mindless buying of mutual funds, and by accepting worthless corporate stock options in lieu of actual pay.

Fast forward to 2007. The Dow is at its historic high and the Nasdaq is roaring back to life. It doesn’t take a genius to realize that now is the time to think about trading again. But truth be told, most people will not take the initiative to make their own trading decisions. Most people will get burned all over again.

To really profit from the coming bull market you must commit yourself to making your own trading decisions. Don’t trust your broker, your boss, or your brother-in-law. Only by assuming responsibility for your financial future can you expect to achieve success; nobody is in a hurry to do it for you.

Most people who do decide to trade on their own hook will naturally think of day trading. And you can bet when the bull market takes off plenty of pundits and gurus will be urging you to day trade. But for most people day trading isn’t a viable option, either because they can’t afford to sit in front of a computer screen all day, or because they have enough common sense to realize day trading is a lethal game. So how can you profitably trade?

The answer for many people is swing trading. Swing trading is the practice of holding stock positions (long or short) for a few days to a few weeks. You don’t need to sit in front of your computer all day with your finger on the panic button, and you don’t have to play cat and mouse with market makers looking to hang your scalp on their wall. The typical moves made by a stock during a swing play will dwarf the tweenies that day traders salivate over, and with sensible use of stop orders you won’t need to lose sleep at night fretting about the risk.

Day trading is a little like the World Series of Poker. Do you think you could sit down with Greg Raymer or Chris Moneymaker and beat them at a hand of No Limit Texas Hold ‘em? When you day trade you’re taking the same chance. The people on the other side of your trades are professional market makers. What the stock will do in the next day, week or year may be beyond the control of any one person, but what happens in the next 15 seconds depends entirely on the decisions of individual traders. Your loss is their immediate gain, and these guys (and gals) have been doing this for a long time. Even the most perfectly formed setup quickly turns into a sucker-play because these professionals know the newbies will take the bait. In the world of day trading, the losers get their hat handed to them in short order.

With swing trading you get the same fair chance as everyone else, institutional traders and individuals alike. As long as you trade stocks with a reasonable amount of volume, you can rest assured that no one trader, or even a group working in unison (which would be illegal, to boot) has the resources to bully the market. Setting your stop 5% below your entry point virtually guarantees that you won’t get scalped (it doesn’t guarantee the stock won’t move 5% against you, but if it does it won’t be because one trader decided to scalp you). And the profit potential for a well played swing trade could be 10% in a few days, or maybe 20-30% in a few weeks. Of course, it takes knowledge and experience to identify the right trades, but your chances of success are just as good as any Wall Street trader if you’re willing to take the time to ‘plan your trade and trade your plan.’

Truly outstanding bull markets only come along a few times in a lifetime. Swing trading gives you a realistic chance of profiting from those great bull markets. You already missed the last one in ’99. Don’t miss out on this chance. Now is the time to start studying up on swing trading so you’ll be ready.

Author: Todd Strickland
Article Source: EzineArticles.com
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So you want to become a Forex day trader? Well, there are some important variables that you will need to take into consideration before you set out on your own. First of all, you will need to decide if you have enough capital to start trading with. Day trading requires higher starting capital because you will generally be exposed to more broker fees due to the high volume of trades you will be entering and exiting. Other important variables will come into play as well, factors such as what method you use to day trade Forex with and whether or not you learn how to day trade Forex from a professional Forex mentor or strike out on your own, these are important considerations to take into account before trading with real money in the market. Still, other important considerations include things such as will you be available during the most profitable trading hours? Or, what is your plan for a solid technical education in trading Forex?

Learning how to day trade Forex can be a tough task if you do not have enough trading capital to fund your trading account with. Day trading requires more money to start with because you will be entering and exiting a higher volume of trades each day which will expose your account to more spread fees or other brokerage fees. This is not to deter you from learning how to day trade with Forex, indeed day trading the Forex market can be one of the most profitable ways to trade if you learn from the proper educator. Just keep in mind that you will need a little more money to get started day trading Forex as compared to position or swing trading.

What method will you use to day trade the Forex market? If you do not know than you have your work cut out for you. It is advised that you learn a logical and simple yet highly effective method that makes use of solid price action setups and a few good moving average indicators to day trade Forex with. Which ever method you decide to go with it is highly advised that you learn from a professional trader offering educational services. If you can find a live Forex trading room that teaches traders how to day trade Forex live than all the better. Live day trading instruction from an experience professional trader will drastically reduce your learning curve and thus speed your ultimate goal of becoming a financially independent Forex day trader.

Another important factor to consider when learning how to day trade Forex is what times will you be available to trade. The best times to day trade Forex are between 1:30am-4:00am EST for the European session and 7:30-10:00am EST for the U.S. session. Day trading Forex during any other time frame is possible but the amount of price movement and volatility you will get will be much less than trading during the times just listed. If you cannot trade during one of these time frames than you may want to consider position trading. Finally, when learning how to day trade Forex it is important you learn from an educator or educational service that offers more than just signals. The source you learn from should offer a relevant and effective education in the method they teach and ultimately be geared towards teaching you how to trade for yourself rather than stringing you along with entry and exit signals only.

Author: Sterling S
Article Source: EzineArticles.com
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One of the biggest financial markets in our economy is the foreign exchange market, which involves a lot of currency day trading. The foreign exchange market and currency trading are not as complicated as they may sound but the rise in the number of people involved in this kind of short trading requires more of an explanation.

Day trading is when a trader buys and sells in a financial market and the trades take place the day that they are made. You can participate in a variety of types of such short-term trading including stock trading, stock option trading, commodity trading, and currency day trading. This is different from swing trading in which the stocks or other traded items are retained for a period of time instead of just for that one day.

People who participate in day trading buy and sell without retaining the stocks or other commodities overnight. You cannot participate in this kind of trades unless you are able to raise enough capital to purchase a minimum of 1,000 shares of stock in one day. If you are new to the idea of this short-term trading, you need to know that you should have about $25,000 in capital available and you should be willing to risk losing all this capital.

Successful day trading requires knowing when to cut your losses. You also have to be able to pick up on trends, go with market flow and to do all this without emotion. The best way to succeed in day trading is to purchase and sell the stocks that sell in higher volumes so you can sell them without problems.

How Is Currency Day Trading Different From Other Short Term Trading?

Currency day trading is different from most day trading because you can participate even if you are not able to raise $25,000 in capital. When you participate in this foreign exchange trading, you can do so with just a few hundred dollars in capital. You can open a mini account in the forex market with very little money.

The benefit to participating in this type of foreign exchange is that you can trade all day and night because the FX market never closes. That means no matter what your schedule, you will be able to find time for trading currency pairs.

You can easily buy and sell currencies all day long. You are able to trade with minimal capital, which means you are not going to lose a lot of money if you use stop losses and stick to your system. You can also use leverage to increase your trade amounts.

Should You Use Margins?

Normal day trading comes with a margin of 4 to 1. That means a $25,000 investment would allow you to trade up to $100,000. Currency day trading gives you a 50 to 1 margin so you can turn a little bit of capital into some great large trades.

You can use as much or as little leverage as you are comfortable with when you are participating in short term forex trades, sometimes called scalping forex, so you do not have to take risks you do not want to take. The FX market is always moving so there is a lot of liquidity. The number of currencies in the foreign exchange market is much less than the stocks in the regular market so you do not have as much to keep track of.

Day trading forex currency does have its risks, as well as its rewards. You have to be smart about your trading, though. The market is constantly changing so you have to watch for the ideal time to buy and sell. You can win and lose trades just like that so it is possible to earn big profits in a small amount of time. Currency day trading requires you to educate yourself about the market, the trends you may see and the best strategies for trading so you can maximize your profits.

Author: Kay Forese
Article Source: EzineArticles.com
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Day trading has become popular in the last decade. There are many people now who make a successful living by trading different markets. Day trading or swing trading which is better?

Day trading is often depicted in a glamorous manner in the trading literature. Do you know this that day trading is stressful and day traders are often referred to as the kings of stress. Now I am not saying that day trading is something you should avoid. There are people who are masters of day trading and this trading style suits their personality.

However, in my opinion swing trading is a much better option. In day trading you have to sit in front of your computer terminal watching the different charts and waiting for the trading signals. You can do that for a few days but after that fatigue and stress will overtake you especially if you have been making losing trades.

In day trading you open and close a trade within the same day and don’t carry forward your trade overnight to the next morning. As compared to that in swing trading you can open a trade anytime of the day when the moment is right and can keep it open for days as long as your profit target is not met.

In swing trading the profit targets are also much higher as well as your stop loss is also more wide so you have more space. Swing trading depends on riding the trend at the right moment and continue riding it as long as it lasts. Day traders are looking for short term trends that may not last more than 24 hours but sometimes as a day trader if at the end of the day you have a profitable position and you feel that you should keep your trade open for a few more days you decide to carry it forward to the next few days.

So sometimes you start as a day trader but end up as a swing trader. In swing trading you don’t need to monitor your trade all day. After opening your trade and putting your stop loss and take profit orders you are free as the market will take its own course after that. You only need to take a look at your trade for 10-15 minutes a day anytime of the day that suits you. As long as your technical analysis was correct, your trade will work. So you have much more freedom in swing trading specially for those who do a regular job and trade as well.

Author: Ahmad A Hassam
Article Source: EzineArticles.com
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Day trading and swing trades have two things in common. Both styles of trading hope to make money from short moves in the market. They are not for the faint of heart. To offset the risk, of course, there is also the possibility of great returns! There is really nothing that compares to the excitement of completing a very successful trade. Some of these trades will last minutes and some as long as several days. Personally I enjoy day trading, swing trades are used less but still hold great profit potential.

Day trading and swing trades are different in that swing trades are less flexible. Day trading proponents get out at the end of every day but are often doing multiple trades per day. One of the strengths of this is knowing where you stand at the close of each day. Swing trades may finish in a day or longer, but are just as likely to last for a few days and during the course of a trade there are more likely to be more ups and downs in profitability. There is potential to earn more from each swing trade, but there are risks. Day trading and swing trading may well be your ticket to quitting the day job if you so desire.

Day trading has no overnight risks, as long as all trades are closed before the market close, swing trades are more susceptible to news or economic climate during the trading day or at night. This news can have a negative affect on your position, beyond the control of the swing trade system. Day trading or swing trading without a system will most likely be unprofitable.

Day trading or swing trading systems start at $2000 and go up from there. There is a lot of variety in the approach different traders take to develop a winning system. How you create your system for trading can be a real mix of philosophies, but the most important thing is to stick to your system. Up Or down market direction makes no difference there are always big opportunities in day trading and swing trades in a variety of markets.

It is possible to trade a few stocks on a regular basis, as long as they follow your predetermined set of rules for trade signals. Trading the same list of stocks has the added incentive that you begin to get a feel for what a stock is likely to do when different news or economic factors occur. If you have a reliable stock pick resource to start with, it helps you to screen out the bad and find new stocks.

Author: Philip Ramer
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I was reading an article recently which maintained it is not possible to make money day trading. Naturally this piqued my interest because I day trade for a living and last time I looked I was doing OK.

The article began by making the very valid point that the vast majority of day trading articles are not written by traders at all, but rather they are written by people marketing systems with hypothetical track records created with the benefit of hindsight.

That is absolutely true.

It is equally true of articles about every other trading style in commodity futures, stocks, forex and options. Whether it is covered calls, trend following with our extra special absolutely never seen before new indicator, swing trading, pairs trading, spread trading, or selling naked options, or any other style, it will often have a hypothetical track record. The time period of the method being promoted is absolutely irrelevant.

The article quotes CFTC rule 4.41 which every futures trader has seen many times. It says:

“Hypothetical or simulated performance results have certain limitations. Unlike an actual performance record, simulated results do not represent actual trading. Also, since the trades have not been executed, the results may have under-or-over compensated for the impact, if any, of certain market factors, such as lack of liquidity. Simulated trading programs in general are also subject to the fact that they are designed with the benefit of hindsight. No representation is being made that any account will or is likely to achieve profit or losses similar to those shown.”

This pertinent warning is not confined to day trading systems. It is applicable to ANY trading system in ANY time frame where hypothetical or simulated track records are provided.

You see, most system developers research historical data to find high probability setup patterns. They develop indicators and trading rules to exploit these patterns. There is nothing wrong with that, so long as it is realized that the resulting system is optimized over this data set. The only valid way to test the system is on a completely different, independent set of data. Often a system that looks spectacular on the data the developer was originally working with will fail miserably when applied over a different period or in a different market.

The article went on to say that all day trading systems lose because “volatility in short term time frames is random and prices can and do go anywhere, meaning that if you try and use support and resistance levels they wont help you with your trading signal or help you get profitable market timing. You therefore cannot get the odds in your favour and will lose over time. This is fairly obvious when you consider that the price in any financial market is made by a vast diverse group of traders”.

Well, that is quite a statement. The fact is “volatility” exists in any time frame and, by definition, it is random in the time frame considered. Indeed, prices can and do go anywhere, whatever time frame you are looking at.

Support and resistance levels are identified from trading charts. If no time scale is displayed it is impossible for any trader to differentiate between a 1 minute chart, a 1 hour chart, a 1 day chart, a weekly chart or a monthly chart if they are not told which market they are looking at. The fact is all charts, in all time frames, exhibit similar characteristics. You will find trends, ranges and most importantly support and resistance levels. It follows that whatever edge you think you can get from identifying support and resistance levels in one time frame is equally applicable in the other time frames too.

Most successful traders use strategies which either (a) sell resistance and buy support, or (b) buy breakouts through resistance and sell breakouts through support. These core strategies are available to any trader working in any time frame.

The distinguishing feature of the day trader is that (s)he always exits trades before the end of the trading session. No positions are held overnight or over weekends. By adopting this approach the trader minimizes “event risk” which is the chance that some dramatic event will so disrupt the markets that you suffer a major loss. (Stop losses are ineffective in this scenario because the market “gaps” through your stop loss level.)

The REAL drawback to day trading is trading costs.

Say that in some hypothetical market, the typical trading costs are commissions (2 points) and slippage on entry and exit (1 point each). So for each trade, trading costs average about 4 points. Now, if a long term trader typically targets 100 points, trading costs would be 4%. For a medium term trader targeting, say, 40 points trading costs are 10%. But for a day trader, targeting 8-10 points, trading costs are 40-50%! Obviously, if a trader is determined to trade this market, then medium to longer term trading is the only sensible option. It would not be surprising for a trader focussed exclusively on this market to form the opinion that day trading does not work.

Clearly, then, not all markets are good for day trading. If the average market movement is just a few points, the trader will be unable to find short term trades which cover the trading costs. Even where the trading costs can be covered, they often turn what looks like a good system into a poor one. This is because, as a rule of thumb, trading costs are nearly always deducted from theoretical profit in successful trades, and added to the theoretical loss in losing trades. This significantly changes the average win to average loss ratio for the system.

To prosper, the day trader seeks out volatile markets where the the projected trading costs are a small percentage of targeted gains. The Expectancy of the system used, allowing for the impact of trading costs on the average win to average loss ratio, must be positive.

Fortunately, many such markets exist. The rather stodgy forex market, with its high trading costs, is NOT a good example. However, there are commodity markets and many individual stocks which exhibit the required volatility.

Author: D Bennett
Article Source: EzineArticles.com
Provided by: Digital Camera Times

First, let us define day trading. Day trading is buying and selling of securities or stocks in a single trading day. Day trading can be practiced in any stock market place, but is most commonly seen in the foreign-exchange (FOREX) market. A day trader is an investor who makes a short-term investment based on speculation. A day trader chooses stocks based on market momentum. Typically, day traders are well-educated about the stock market basics and have good amount of capital to be invested. They utilize short-term trading strategies to gain of highly liquid stocks. Day traders bring efficiency into the stock market to keep them up and running and provide markets liquidity.

Many argue that day trading carries with it a huge amount of risk and the profits made out of day trading is not comparable to the risks associated with it. Despite the controversies associated with it, day trading can be done successfully based on a few factors:

Knowledge of the Money Market

It is very important to have a good knowledge of the stock market in order to be successful with short-term day trading. Individuals who attempt trade without a good understanding of the basics can lose huge amounts.

Good Amount of Capital to Invest

It is important to day trade with good amount of capital as it involves capital risk. A large amount of capital helps to capitalize on intra-day price movements.

Good Strategy to Win

A day trader needs to employ a good strategy in order to be successful. It can be a high-risk, high-gain strategy like swing trading or medium-risk, high-gain strategy like investing at the time of mergers. Investors can also keep the following in mind during day trading.

i) An investor needs to determine the major trend of the day. When the market is on uptrend, only buy-side trades can be entered, and vice versa. This trend is generally established during the first part of a trading day.
ii) An investor also must know the short-term trend of the market within the major trend of the day. This determines the market corrections that need to be made while day trading.
iii) It is also very useful to determine the entry and exit points in the market using various day trading indicators.

Access to News Source and Analytical Software

Information about the money market is an important prerequisite to successful day trading. Access to news channel and websites that keep an investor updated on the important stories in the stock market is very useful to day traders. There are also various kinds of software that indicate the swings in the market and an important tool for day traders.

Discipline

The price of a volatile stock can fluctuate quickly. Therefore, it is important to be disciplined and stick to the trading plan for a day trader. Hence, it makes no sense to trade for the sake of trading. If there is no good trading opportunity, it is prudent for an investor to stay out of the market.

Keeping Emotions in Check

Last, it is important for a day trader not be ruled by emotions during trading.
If all these can be kept in mind, a day trader can meet with success against the criticisms.

Author: Vijay Kumar Sharma
Article Source: EzineArticles.com
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Are you thinking of entering the fast-paced world of day trading? Arm yourselves with the information from this fact sheet on day trading.

What is day trading?

Day trading is an investment tactic that does online daily stock trading with a relatively short investment. Those who do day trading usually buy and sell securities during the same market day and, as a general rule, do not hold stocks overnight. Many day traders make dozens of trades every market day hoping to capture profits that arise from small intraday price fluctuations.

How is day trading different from swing trading?

Day trading relatively holds the stock for only the day. After the stock market closes, a day trader has no stock in his hands. Swing trading holds a stock for at least a few days, waiting out for the best price before dumping it back to the market. Day trading is much more stressful and requires guts and a keen business sense. Once you get good at day trading, you can earn up to $50,000 from your initial investment.

How much capital would you need for day trading?

You need an investment equivalent to buy 1000 stocks. That is roughly around $20,000. Because the chances are small that you will find a marketable stock with a price of under $20, this is enough to get your day trading underway. However, you must remember that this is a 100% risk capital so do not worry too much if you lose this amount very early.

What are the general rules for day trading?

• Always trade with the trend.
• Cut losses short
• Never get emotionally involved in your trades.

What are the most suitable stocks to trade for day trading?

It is advisable to trade high volume stocks. Go with the trend with the popular stocks available. It’ll be easier for you to sell those stocks at the end of the day trading.

How does a usual day trading transaction occur?

For example, at 10:00 AM a day trader might buy 1000 shares of stock XYZ just as the price begins to rise on good news, then sell it at 10:04 AM when it’s up by 1/2 ($0.50). The day trader makes $500, minus commission. With today’s cheap commissions of $29.95 or less per trade, that’s a quick $440.10 or better, excluding taxes.

Most people who deal with day trading spend all of their time in front of the computer, watching the slightest change in the stock price. As the prices go up and down, the day trader must be alert as to when to sell his stock or wait for the moment to hold on it. This can be a very stressful lifestyle as a mere second could mean an increase of half the stock price and missing that moment for any person engaging in day trading could mean a loss on his investment.

Day trading is not a get rich scheme. It is serious business where you could lose everything within minutes because of wrong information. Before jumping into day trading, remember to do your homework first. Go to seminars on day trading, use simulations if possible and practice reading market indicators. To be a successful day trader, don’t just need luck. Knowledge and experience counts. Welcome to the world of stock markets and investments!

Author: Michael Sanford
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Day trading or swing trading refers to the practice of buying and selling multiple stocks within a single day. It is the perfect vehicle for the short term intra-day type trader , who would like to hold on to a position for a short time, a few minutes or a few hour, and squares their positions prior to the end of the day.

Day Trading

The stock or futures day trader is someone who is making trades intraday. They tend to do this with frequency throughout the day. A day trader may trade a few times per day or dozens of times per day.

Swing Trading

The swing trader could be a stock, option or futures investor. This type of trader is looking to take strategic bites out of the stock market that can stretch over a day or multiple days and weeks.

Long Term Swing Trading

The long term swing trader is very much like the regular swing trader, the only difference is their focus is on weeks and months as opposed to normal swing traders who focus on singular days.

• Day and swing trading involve taking a position in the markets with a goal of squaring that position before the end of that day.
• A day trader typically trades several times a day looking for fractions of a point to a few points per trade, but who close out all their positions by the end of the business day.
• A swing Trader has slower cycle of trades, meaning less trades to make, therefore fewer commissions, but also less chance of mistakes and an increased ability to “snag” the more significant multi-day profitable swing trades.
• The goal of a day or swing trader is to capitalize on the price movement within a market trading day.
• Unlike investors, a day trader may hold positions for only a few seconds or minutes, and never, ever overnight.

What Day Trading really means?

“Day trading ” is a widely misused and misunderstood phrase or term . Officially day trading means to not hold on to your stock positions longer than the current trading day; simply put, not holding any stock position overnight. this is really the safest way to day trade, because you are not exposed to any of the potential losses that can occur, while the stock market is closed due to news that could affect the prices of your stocks. Unfortunately, a huge percentage of people who claim to be “day trading” hold stock positions overnight because of fear or greed, thus setting themselves up for the loss or decreasing of their capital. With the fluctuation of trading currencies, the term “day trading” changes a little bit. Since currencies can be traded around the clock, 24-hours-a-day, there is no such thing as “overnight” trading. So you can have open stock positions for longer than a day with active stop losses that could be activated at any time.

Day trading has been divided into a few distinct styles, including:

Scalpers: This particular style of day trading uses the rapid and repeated buying and selling of a large volume of stocks within seconds, minutes or hours. The goal is to earn a small profit share on each transaction while minimizing the risk.

Momentum Traders: This particular style of day trading involves identifying and trading stocks that are in a moving pattern during the day, the goal of this type of day trading style is to buy such stocks at bottoms and sell at the tops.

Advantages of Day Trading

No Overnight Risk: Since positions are closed prior to the end of the trading day , news and events that effect next trading day’s opening prices do not effect your portfolio or your capital, you have what you had at market close the previous day.

Better Leverage: Day traders have better leverage on their trading capital because of the low margin requirements as their traders that are closed in the same market day. This increased leverage could increase your profits if used correctly .

Ability to profit regardless of Market Direction: Day trading often will utilize short – selling trading to take advantage of declining stock prices. The ability to lock in profits even as market falls throughout the trading day is extremely useful during bear market condition.

Many people think day trading software and robots are illegal but in reality they are perfectly legal and a vital tool for most day or swing traders. I personally use Day Trading Robot because it is the best for swing trading. Most software trading robots are not designed for the many styles of trading outlined in this article only for Day trading in general.

Author: Darius Harris
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