One must remember, that of those who try day trading, probably only the minority treats it like a serious business and commits serious time investment into studying the markets and nuances of day trading. Most just look for easy money, try it, fail and add to that 90-99% number of losers. So, if exclude those, and observe just those, who are seriously into the trading business, who are ready to deliberately study this profession for a few years to become true masters of it, percentage of those who fail will probably be much lower.
There is a load more money to be made from day trading than swing trading , trading the wind and noise will have the most problems and failures.Higher risk will always give higher rewards. It is also possible to make as much from swing and position trading , by trading only a few times a week on a select few instruments.On longer t/f swing/position ,the spread and other advantages improve the odds in favour of the trader. There are certain daily time frame currency strategies producing very good risk reward ratios, in excess of 7 .Compared to this day /frequent trading has r/r ratios of less than 2
All approaches have their benefits and drawbacks... So in my view, ideal combo is do them all, from scalping to value investing.
Are the vast majority of intraday forex moves random?If yes , can money be made from random moves ?Is it easy?Can money be made without an edge in a random market? The only real trends in forex are related to interest rate expectations, and these are traded nicely in swing trading and often last weeks. The pattern below repeats itself many times daily.We as humans see trends where none exist.The vast majority of intraday moves are random , there are no real trends. A)Bank traders are aware of order flow, they front run their order flow and push prices B) They input client orders , they had front run , it pushes prices higher, retailers join the trend , the bank traders sell and knock out all the stops , sending prices lower.Day trader loses. c)Price comes down retail trader buys , price keeps dropping and dropping and trader blows out.The odds of success are against buying against price direction. Finding an edge in random markets. If markets were random you could not make money trading.You need an edge to make money from day trading.The big boys have the edge . http://www.smbtraining.com/blog/finding-an-edge-in-random-markets Day Trading Is for Suckers http://www.slate.com/id/1003329/ Day trading is predicated on a fundamental misconception about the nature of prices, namely that they are somehow persistent and predictable. Now, some interesting academic studies in recent years have called into question the idea that stock prices move only in a pure random walk (i.e., they're as likely to go up as go down at any one moment). But the walk is effectively random, in the sense that patterns are incredibly hard to discern and basically impossible to take advantage of with any regularity. In order to succeed as a day trader over time, you have to be one thing: incredibly lucky. Why do Forex prices move randomly? http://www.stocktrendsystem.com/trading/forex.html Most of the time currency quotes are purely driven by real demand and supply transforming the uncoordinated arrivals of buy and sell orders into a noisy chart looking like the ones of dull stocks. With real demand and supply I mean payments that have to be made as part of something real like physical trades of goods, sales of services or economical transactions of the government. Contrasting to that is speculative trading or price manipulation with the intent to rewind the money shifting later. But there are of course intermediate phases of regular price behavior.
What is a "real trend"? Interest rates (aka money river) driven long-term trends are important for position traders indeed, but simple big orders filling can be a decent trend for a scalper operating with 3-6 ticks stop and 12-20 ticks profit target... One of the bright quant guys I know, once said "I am slippage of the big boys". He trades stocks, but conception is the same for almost any scalper.
Do you have a definitive definition of trend?.....if so, what is it? What makes the 'rest' of the intraday moves NOT random in your book? Very curious to hear what you have to say. I obviously disagree strongly with your premise but nonetheless you must have your reasons.
My trading R:R on oil futures varies greatly, but it's almost never less than 2. When I'm trading with the trend it's at least 3. Friday, I had two trades that turned out having R:R's of 23 and 11, respectively. The low risk, as CF taught me, is all about the entry process; the high reward is all about interpreting the price action at each key technical level that price reaches.
The real trends in forex are on the daily time frames , these are traded by the big currency traders.and driven by interest rates and fundamentals. Take a look at the image and you can see these mile long trends.This is where the serious money is made , You get trends on lower time frames , but a lot of them are random walks , intra day noise driven by short term news flow.You get trends after news announcements , most of them are random illusions. Do you believe real traders are mentoring others on 4 tick stops ,trading hundreds of times a day and giving away their money in spreads to brokers? The real currency traders only trade 4 to 5 times a year.
Trend definition is subjective, a single move of 50 pips on the tick chart, followed by a 20 % re tracement in the next few minutes forming a through, followed by another high on the tick can be considered a trend.On 5 min chart it may look like a single bar move. I look at trend line breaks and reversals to see trends on lower time frames An intraday move is not random , if interest rates expectations announcement drove the prices.As an example ECB states strong vigilance on inflation , followed by an appreciation of the Euro .Another example is no announcement , when market expects another strong vigilance statement, if price depreciates it is driven by market fundamentals.These moves are not random. If euro is expected to announce higher interest rates, but a new release shows U S economy created more jobs sending euro lower , this news flow would be considered noise.In this case euro will rebound.