Day Trading the Forex Market Profitably - Part 2 by Avi Frister

To trade volatile and liquid markets

Since your job as a day trader is to capture intraday swings it is crucial that the market you are trading has enough movement to allow you to do this. It is also important that the market you are trading has enough liquidity so that order fills do not suffer from excessive slippage. You have to select a market that its volatility is permanent and not a temporary occurrence. Since you are basing your trading method on catching intraday price swings you have to know that you are trading in the right place. As a day trader volatility is your ally and you have to know that you can count on it every single day (or at least 90% of the days). Liquid markets will provide you with good order fills. As a day trader this is very important since you are aiming at smaller profit objectives and hence larger slippage will eat away more of your profits. When trading several times a day this adds up and can be the difference between success and failure.

As a forex day trader you have to apply all the above rules and principles plus other criteria that are unique to the forex market.

Time of day trading

The forex market is a 24 hour market. Never stops except on weekends. Within this 24 hour period different currencies behave in different manners. As a day trader it is very important to know the personality of the currency you are trading. For example , the GBP/USD is more volatile in early to mid European session then any other liquid pair. For a day trader trading in these hours it would be wise to take advantage of the price swings the GBP/USD pair offers instead of trading some other currency pair that constantly shows no movement. The USD/CAD pair is silent in the early to mid European session but starts to have more price movement toward the start of the US session.

Spread and liquidity

Forex brokers do not charge you a commission for every trade you make (at least most forex brokers). Instead, they make their profit on the bid/ask spread which is measured in pips. As a forex day trader you are aiming at capturing small price swings sometimes several time per day. Also, your profit objectives are obviously much smaller than the swing traders profit objectives. All this means one thing: every pip counts. You cannot afford to trade currency pairs with large spreads, if you do your profit will get eaten up to a point where you will not be trading with an adequate risk/reward ratio. Forex day trading must be done with liquid pairs. Most forex brokers will provide you with a very narrow spread for the most liquid currency pairs. As an example, many brokers are now offering a 2 pip spread for EUR/USD and USD/JPY and a 3 pip spread for USD/CHF and GBP/USD. These are the most liquid pairs and the ones a day trader should focus on.

Volatility

As a day trader volatility is you friend, a friend you cannot afford to trade without. In its basic definition, volatility is simply the amount of price change with relation to time. Volatile currency pairs have various price swings (price changes) during a small period of time (one day). These price swings are what a day trader lives on. In the forex market volatility many times comes hand in hand with liquidity. The most liquid pairs are the ones that are the most volatile. The big 4: EUR/USD, GBP/USD, USD/JPY and USD/CHF are the most liquid pairs that provide the best volatility and hence opportunity for the forex day trader. Within these four pairs, the GBP/USD is the most volatile. Although it is not the most liquid (the EUR/USD is), but it is the most volatility. This pair, traded with the right broker (one that provides a 3 pip spread) can present many profitable opportunities for the astute day trader.

In conclusion, the forex day trader has to be prepared not only with the basic day trading rules, skills and principles. His job is to incorporate into his trading the characteristics and uniqueness of the forex market. Remember, every currency pair might present different opportunities and it is your job to always focus on the ones that best fit the purpose and objectives of day trading. I hope to have contributed to your forex trading education and I thank you for taking the time to read this article.

Copyright (c) 2006 Avi Frister

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Wednesday, August 15, 2012

Team Sports Insider: Top 5 Books for Sports Parents; How to Set Offseason Goals; Summer Hydration Tips

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This month: 5 must-reads for sports parents, how to get your team to play defense, and learn to jump higher... Trouble viewing this newsletter? Try this link: http://www.active.com/camps/newsletters/8-15-12.htm Team Sports Insider Formerly: Presented by » find more newsletters » go to eteamz Top 5 Books for Sports Parents Here are five books that offer support, guidance and advice to parents raising a young athlete. » More Summer Hydration Guide Get the straight scoop on what you should drink, and when in this hydration guide for athletes. » More The Power of Offseason Goals Just because your young athlete isn't playing, doesn't mean they can't get better. Help them boost their skills with these tips from a sports psychologist. » More Get Your Squad to Play Defense Good baseball defense isn't flashy, but it's crucial to your team's success. Find out how one Hall of Fame college coach got his squad to play their best on defense. » More How to Jump Higher You don't have to be Lebron James to improve your vertical jump. Find out how young hoops players can maximize their vertical leap. » More Coaches Corner » Sports Camp Portal » Baseball Hitting Drills » Guide to Coaching Soccer » Pop Warner Football » Softball Pitching Guide » Basketball Tips » Volleyball 101 » Create a Team Website Featured Youth Camps Find More Camps Raise funds the way you play! Active Team Fundraising offers simple, proven sports fundraisers that get you to your goal while still having fun. Get your free guide, then order at 1.866.698.3267 or shop online. And if you have an eteamz site, you'll find an integrated fundraising store under your 'Support Our Team' tab ... ready and waiting. Click Here to Start! Little League® World Series: LIVE! Do you have Little League® World Series fever? Watch games in real-time, replay your favorite moments and stay on top of the tournament schedule right from your computer. Check out the portal to the series excitement, available until the final pitch has been thrown on August 26th. Check it Out! Resources for Parents » Sports Parenting 101 » Parent's Guide to Softball » Saving on Sports Equipment » Team Travel Tips » Parent's Guide to Youth Soccer » Parent-Coach Relationships » Encouraging an Active Life » Feeding Your Little Athletes » Parent's Guide to Basketball Presented by Copyright 2012 The Active Network, Inc. Active.com | ActiveGolf.com | eteamz | Your Privacy Rights | Advertising You are currently subscribed to active-team-sports-insider as: nel721rod.bestbaseball@blogger.com. If you would like to unsubscribe from this newsletter please follow this link: http://newsletters.active.com/u?id=131886710.1ae5dfd201731f68a94a157c7e6b02a0&n=T&l=active-team-sports-insider&o=26430751. To manage all of your newsletter subscriptions, visit http://www.active.com/newsletters/manage or mail to: The Active Network, 10182 Telesis Ct, Ste. 100, San Diego, CA 92121.