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Disadvantages of Forex Intraday Trading
Written by: PaxForex analytics dept - Thursday, 17 May 2018 0 comments
Learning to trade the forex market can be an overwhelming venture. Just like any other career or trade a person needs to learn, it takes time. There are many parts to trading including reading charts, candlesticks, and timing. Regardless of all of that, the first thing a new trader needs to decide is what type of trader they are. There are three general types of active trading; scalping, intraday, and swing trading. Factors that help determine the trading style are: how much time an open trade position is maintained, trade size (or position size), and the type of money management strategy that is used.
Traders have access to high margins with forex, which means they only need small outlays of cash to control large amounts of currency. This is why forex traders stand to gain huge profits, just as they run the risk of huge losses. Becoming a day trader may seem attractive at first glance, but it really makes sense for a novice trader to take a good look at what they will be doing as a day trader and assess both their probability of success and whether or not day trading will suit their desired lifestyle.
Whether to choose day trading or swing trading also comes down to personality. Day trading can be higher stress, requires sustained focus for extended periods of time and incredible discipline. People that like action, have fast reflexes, and/or like video
games and poker tend to gravitate toward day trading. Though there are several advantages to using this sort of short-term trading timeframe, the overwhelming shortcomings make day trading an uphill battle for most who engage in this type of trading related business.
The most prominent disadvantage that day trading is the transaction costs that are involved. Because of day trader enters more trades, so they pay the more spread to their broker and generate more commissions for their IB. The second disadvantage to day trading that the number of resources that requires for longer-term methods of trading. The day traders consume more time in front of the computer screen, and they have to more focus and more technology such as high powered charts and news feeds than longer-term traders.
Some may argue that forex day trading is a field that should be left for the people that have a great experience and can get fully immersed in the activity. Others say that day trading is the best way to make money in the least possible time and this is the best type of trading. Whatever the case is, day trading is the field in which both pros and cons occur. While this type of trading is gaining popularity with each passing day, it is only effective for the people who are eager to commit a lot in order to succeed at it.