Forex Day Trading Advantages

Some of the advantages of day trading forex can be summarized as follows;

• Can trade with closer stop losses, thereby limiting risk.
• Detection of reversal of trends earlier than end of day traders.
• Can profit from shorter term trends. (Seconds to minute trends)
• Avoid overnight unexpected price movements.

Disadvantages of forex day trading

• Involves more time commitment than end of day trading.
• More stressful. Refer trading psychology
here.

The growing trend for day traders is to program their forex trading strategy into MetaTrader, thereby overcoming the inherent disadvantages of day trading. Learn more about automated forex trading here

Who makes the most money? Day traders or Position traders?

A good question would have to be, do those whom practice forex day trading make more money than the traders whom hold positions for at least a few days?

I have not heard of any research that answers that question. I would assume (overall) that end of day traders whom hold positions for between one to four days would be able to make more that a day trader entering and exiting positions all day long.

Why would I assume that? Overall I would assume that there are not too many highly skilled day traders whom can keep up with the physical and mental demands of day trading. The forexmarket can move oscillate up and down wildly at times thereby putting enormous pressure on our day trader to perform consistently.

Speaking from personal experience having traded all time frames, I have found it easier to make profitable trades lasting a day or two than shorter time frames.

With the increase in automated trading robots, I can see this changing as what WD Gann calls the weakest element in trading, "the human element" has now been overcome.

I would now say that from this time onwards the most profitable traders are going to be those that use a combination end of day strategies with their automated robots. That is these 'end of day traders' whom in the past have traded time frames of one to four days will now build simple MT4 programs to only trade the anticipated direction of their one to four day forecast.

Example of intra day chart

The example below is a 15 minute candle chart which shows a vast array of information that those forex day trading can take advantage of before the end of day data is available.

Longer term position traders can also benefit from reading intra day price action. Even though they may not actively 'day trade'.

click on chart enlarge in new window

The next example shows the same chart on a 1 hour basis

click on chart enlarge in new window

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