Intraday trading is a difficult trader’s way
Much has been said about the medium-term currency trading in the Forex market, that it is possible to calculate all possible risks with it, but what about the fact that the bulk of traders trade within a day, and by the way, there are many successful traders among them.
I would like to touch on another important point. Each of us heard the phrase: “The Forex market is volatile.” But very few people thought that this phrase is just an excuse for traders not taking into account the subtleties in the trading system. Large parts when creating trading systems can be counted on the fingers, but small is very much and just do not take into account only one detail, and it can after a couple of years of successful trade lead to a full or partial (to a greater extent) loss of the deposit.
There is one wise phrase: “All ingenious is simple.” It is this phrase and should be a generative when creating an intraday trading system, because the less accumulated in it various indicators of Forex , lines, etc., the smaller the small details that will need to be taken into account.
For some reason, many traders believe that medium-term trading gives a weak profit and it takes a long time to wait for the event (closing positions or signals for opening). Although each of us during intraday trading turned out to be in a long drawdown from several weeks to several months. For unknown reasons, most traders believe that trading within a day is capable of giving more points of profit. Another myth that was not confirmed by the facts.
Now we want to touch the management of capital when working inside the day. And again a mistake. Most people think that working inside the day can be a large amount, since the installation of stop loss is carried out at a shorter distance. For some reason, they do not take into account the frequency of their operation, do not take into account the load on the spread, which reduces the probability of a positive event.
Exponential growth of the deposit. Everyone believes in this Grail, that if it is profitable to trade within a day, and linearly increase volumes, based on the growth of the deposit, you can quickly become rich, and even with a small deposit. Of course, the result of this work is the following: the trader needs approximately to get 1.2 (one whole and two tenths) of profit, to cover one loss. This statistics is approximate for equal take profits and stop loss.
By not doing the right things, we create difficulties for ourselves:
- A) Load on the spread.
- B) Load on linear increase in trade volumes.
- C) If the first two items are present, then this point only aggravates them – trade in large volumes.
Trade in large volumes in intraday trading does not imply a bet on the entire deposit. Even the trading volume of ten percent of the deposit is very large. Trading volumes should not differ, as for intraday trading, and medium-term. Risks are the same everywhere.
One interesting and simple experiment was conducted somehow, about how, within a day, it is possible to work, in the medium-term trading system, by increasing trading volumes, by five times. The result was the following, the profit grew rapidly, but when the deals were less successful, it also quickly melted. The ratio of profit and risk, it was even worse than with medium-term trading on the same trading system. It was, of course, affected by the spread, the system was influenced by false inputs, the number of which is increased due to the decrease in the probability of a positive event.
For profitable work within a day, you should not adhere to fixed values of take profit and stop losses, since initially work is conducted with a probability of less than five to ten percent. With intraday trading, the accuracy of entry and exit plays a greater role than the management of trading volumes, although this option is also acceptable, in which stop loss is not used. Often, small profits and large stop losses are used. Which in determining the global trend (W1, MN) allow very rare cases to receive losses.
But in such situations, usually, additional work is done with trading volumesto reduce the time at which the position should be closed. In these techniques should initially exhibit an understated trade volume in two, and sometimes three times, in the case of refills, when the position goes into negative. Stocks, in turn, can be carried out both by obtaining an intraday signal and finding the price in the range between the opening price of the first position and its stop loss, and on a certain figure, which can be calculated by determining the distance from the opening price of the first position to the point where the trend is canceled period W1 or MN, and divide by the number of refills. Variations in this case can be very much. The size of the trading position and the distance between them can vary (it may not be equal).
As you have already noticed, intraday tradingcontains much more small details that need to be taken into account than medium-term trade . As mentioned above, it is necessary to simplify, in order to make it possible to identify shortcomings in the trading system , which eventually will end. And at the end of this difficult path, a positive result will immediately be obtained. Do not give up, he who surrenders does not win.