Reason 2: Forex Daily Volatility is Typically
"Why does the market always go against me
as soon as I enter a trade?"
Another reason why day traders find
that trades go against them as soon as they take a position is
because minute-to-minute volatility is typically low in the forex
market, with movements barely exceeding the spread.
that the moment you realize the trend has changed (and you take a
position) by the time you enter the trade you will find yourself at
the top or bottom of the trend as it reverses again.
Oftentimes, the greatest volatility in
the daily forex market happens in a short period of time, called breakouts. Many forex daytraders claim to only trade these
breakouts. However, the few people who claim to
trade these breakouts aren't even correct a lot of the time.
if they can achieve a 60% success rate, then they think they have a
successful strategy. They claim that they can win as long as their
winning trades exceed their losses – success rate doesn't matter.
However, the problem with this type of trading is that people psychologically have an
extremely difficult time accepting losses while simultaneously they
tend to be risk adverse with profits. Therefore, almost all traders
end up letting their losing trades run, while they cut their winning
In contrast, long-term traders are
achieving almost a 100% success rate on trades due to the reliability
and predictability of larger trends. My personal "win ratio" since I
started trading long-term is about 91%, and my wins are always
significantly greater than my losses because these mega-trends last
When I enter into a long-term trade, I have some initial risk based on my
stop-loss; however, after my trade is 100+ pips in the profit, I can move my stop-loss to breakeven (or use a trailing-stop) and the trade becomes risk-free. Worse
case scenario is I get a little bit of profit, and best case scenario
is the trade continues to run in my favor.
Either way, I make money, which is why I have such a high win ratio trading long-term.
Trading long-term, I have a high win ratio AND my winners are always a lot bigger than my losers - the best of both worlds. The only time I actually experience a loss is if my stop-loss gets triggered when I first enter the long-term trade. However, once I have let it run for a week or two, I am no longer in danger the trade being a loser.
Take a look at a currency pair like the
EUR/USD and you'll see large trends lasting for weeks or months.
These mega-trends are extremely predictable, and you can be assured
that once the trend reverses it will typically continue for a long
Reason 3: Higher Cost of the Spread Compared
How much the spread actually costs is
relative to how many pips you are aiming to achieve in a winning
trade. If your goal is to only gain 10 pips, then a 2 pip spread is a
very high cost, which places you at a huge disadvantage compared to
someone paying 2 pips to gain 100 pips.
When you daytrade forex, you are immediately at a -20%
disadvantage as soon as you enter the trade (compared to your goal),
because it puts you at -2 pips which is now 12 pips away from your 10
pips goal. However, when your goal is to gain 100 pips over the
course of several days, then the spread is a low cost in comparison
and has very little impact overall.
Daytrading forex is almost like playing the
casino game Roulette with only 3 spaces instead of 37.
The middle green space is the spread, while the one red and one black spaces are your potential wins/losses. The cost of playing the game is much higher when the dealers cut is high compared to your profit goals.
In summary, these three facts are why so many
traders lose money trying to day trade the forex market:  the daily
trends are less predictable,  the daily volatility is generally low,
and  the spread is a high cost compared to profit goals.
And it is also these reasons why longer
time-frames are called the "Holy Grail" of forex trading.
Learn more about why long-term trading
is more consistent and profitable than daytrading at How to Win in