Day trading has always been a tough game, requiring a very strong psyche, discipline and a high level of trading skills to succeed in.
Nowadays though it's even harder due to the stronger competition, not only by humans but especially by computers trading at a speed a human trader simply can not match up to. High-Frequency Trading is happening in literally all of the popular markets out there and like Chess, scalping has become a game where humans cannot win against the AIs anymore. Add to that the speed/location advantage of the HFT shops and the odds of success decrease even more.
My advice is to forget about scalping. Even without the trading bots, odds of success to make money scalping are very low as the trading costs involved are incredibly hard to overcome. To not get completely killed by trading costs you need to trade in very liquid markets. But that's exactly where the robots are.
But not everything is lost, maybe all you have to do is to slightly adapt as a day trader. Here are some of the things you can do:
- The longer your trades last, the higher your profits (and losses) will be on average. It's a simple fact, if your trades last 4 hours on average, you'll be much more likely to catch a big move than if you average trade lasts 5 minutes. This way the HFTs can't hurt you as much anymore and also trading costs will have much less of an impact.
- You don't have to do 20 trades per day to be a successful day trader, quite the opposite! The more you trade, the higher your trading costs and believe me these trading costs will kill you in the long run.
- Don't get married to a specific market, instead, diversify your day trading over different, uncorrelated markets. This will strongly increase your chances of success as you'll stop seeing opportunities in a market where there aren't any.
- Day trade only markets that provide a good bang for the buck. I do this by looking at the average daily range of a market in relation to the average trading costs.
- Trade the news. I know you often hear the opposite advice but if you learn how to do this right, trading the news is one of the best ways to day trade. Just look at the markets, especially currencies. Isn't it true that most big moves happen right when some economic report is coming out? Sure, volatility explodes and liquidity often isn't that great. But hey, isn't high volatility exactly what you're looking for as a day trader? Now first you need to do your homework of course and have a plan ready on how to trade each of the specific news events.
CFTC RULE 4.41 - 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.
Editors’ Picks
EUR/USD closes in on 1.0700 amid broad USD strength
EUR/USD came under renewed bearish pressure in the American session and dropped to its lowest level since late March near 1.0700. Stronger-than-forecast PCE inflation data and hawkish comments from Fed's Mester provide a boost to the US Dollar and weigh on the pair.
GBP/USD loses bullish momentum after US data, falls below 1.2350
GBP/USD has reversed its direction and erased a large portion of its daily gains on Friday after the data from the US showed that the annual core PCE inflation edged higher to 4.7% in April. Although the pair clings to small daily gains below 1.2350, it remains on track to end the third straight week in negative territory.
USD/JPY hits fresh YTD peak amid stronger US PCE data-led modest USD uptick
The USD/JPY pair reverses an intraday dip to the 139.50 area and climbs to a fresh YTD peak in reaction to the stronger US PCE Price Index. The pair is currently placed just above the 140.00 psychological mark and seems poised to prolong its recent upward trajectory witnessed over the past two weeks or so.
Editors’ Picks
EUR/USD closes in on 1.0700 amid broad USD strength
EUR/USD came under renewed bearish pressure in the American session and dropped to its lowest level since late March near 1.0700. Stronger-than-forecast PCE inflation data and hawkish comments from Fed's Mester provide a boost to the US Dollar and weigh on the pair.
GBP/USD loses bullish momentum after US data, falls below 1.2350
GBP/USD has reversed its direction and erased a large portion of its daily gains on Friday after the data from the US showed that the annual core PCE inflation edged higher to 4.7% in April. Although the pair clings to small daily gains below 1.2350, it remains on track to end the third straight week in negative territory.
Gold erases daily gains, holds above $1,940
Gold price turned south and declined to the $1,940 area in the American session on Friday. The benchmark 10-year US Treasury bond yield holds stead above 3.8% after stronger-than-expected core PCE inflation data from the US, not allowing XAU/USD to gain traction.
Ethereum price to outpace Bitcoin price as ETH jumps over key hurdle where BTC fumbles
ETH is working on its recovery after it dipped to a two-week low on Thursday. While Bitcoin price has failed to make a similar move and head back above $26,500, Ethereum is outpacing Bitcoin and has been able to push above $1,800.
Ford Stock: New agreement will give customers access to 12,000 Tesla chargers
Ford (F) stock has advanced about 2.5% early Friday following CEO Chris Farley’s announcement that Ford owners will be able to charge their EVs at Tesla Superchargers beginning in early 2024.
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