Of course overtrading benefits brokers. It's a fact that their primary source of income is via charging you a commission (flat rate or spread)...it's job security for them. Do you think brokers will survive if they specifically encourage their clients to only trade a few times per month or year. Just the same, they know and you should also know (if you're a veteran trader) overtrading isn't exclusive to the use of small stops. There's other reasons why overtrading occurs such as volatile markets, lack of discipline involving greed/anger/revenge, trading without a trading plan, margin abuse by traders et cetera. Also, I strongly disagree with you when you said overtrading only benefits the broker. It also benefits the few profitable traders because traders that tend to overtrade are usually on the opposite side of the trades of those few profitable traders. Think about the above very carefully. If you were a profitable trader...wouldn't you want those on the other side of your trades to be overtrading considering traders that overtrade have arguably more important problems that has nothing to do with the use of small stops. In addition, there's the definition of overtrading. If you have two valid trade signals via your trading plan and you then take one more trade that's not valid via your trading plan...you're overtrading even though you've only taken a total of three trades regardless if you took those three trades in one day, one week, one month or one year...it's still overtrading. Further, if you have five valid trade signals via your trading plan and you've only traded two of those five valid trade signals...you're undertrading and that could (usually does) have a dramatic impact on your profitability even though you're obviously saving on commissions. Brokers want you to trade and they want you to trade as often as possible accordingly to your trading plan regardless if that number is 3 trades per month or 1000 trades per month. If you don't...they go out of business and where will that leave you if you're one of the few profitable traders. They also go out of business if you undertrade because that too impacts your profitability and if you're consistently doing such...the broker loses another client. Simply, we all know overtrading and undertrading is a problem for most traders. Yet, don't pretend it's exclusively the brokers fault nor pretend it's exclusive to a specific number of trades when in fact it relates to the trading plan itself and inabilities of the trader. Mark
3 to 5 pips is scalping , it can be done during the day and better at night .Scalping is a 24 hour game.The risk reward can be bad with wide spread of buckets. Swing strategies and position strategies have signals during the day.These are strategies trending on the hourly and longer time frame .Swing strategies use 20 to 100 pip stops. Day trading is when a trader tries to trade during the day , and expects the market to give him his profits daily , using 5 to 20 pip stops. I only have 3 threads started by me.
I read this interesting thread on randomness , it gives clues why day trading forex is difficult.. People see trends where none exist on the lower time frames. http://www.elitetrader.com/vb/showthread.php?s=&threadid=118599&perpage=6&pagenumber=1 Image below shows chop during the day and trend at night.Not good for day trading.
http://1.bp.blogspot.com/--6dOpdP46IA/TeQGSkekysI/AAAAAAAAHjw/uu3QwjQZYTk/s1600/EURUSD.png http://4.bp.blogspot.com/-wl76TwgyeQk/TdXZruFiZ9I/AAAAAAAAHcw/5EZ29_MYJh4/s1600/EURUSD.png These are 50-60pips movement trades. Is it really that impossible to do? The price movements are choppy if you cannot trade.
Your charts are on 4 min . I do trade them but it is not easy , considering the easy money/trades/trends are at night.
"Donât look to the stars for the cause of your misfortunes: look to yourself to get better results." - Napoleon Hill If you keep insisting that daytrading is difficult and created 3 threads to convince yourself (and others) that you are right that daytrading is difficult, then it IS difficult. But if you work on improving your techniques and learn from others (instead of gathering negative views) then it can work. 4mins is between 15mins and 1mins, sort of 4x zoom. I trade this 4mins exclusively but you said it is not easy. Because you chose to believe so.
I think you have a failed trend-trading strategy, hence causing your obsession to thread about how daytrading is difficult, that trends work "at night" and not during the day, or forex daytrading is difficult in general. Did it occur to you that it is actually your trend-following strategy that is not working? I just took a counter-trend trade on AUD/USD and up +42pips having taken partial profits earlier. Yes, this is a daytrade and I used a tight small stop that is now moved to breakeven+2pips, and I expect to close it within the next few minutes to hour. Why is it so difficult to think that it can be possible? That your trend-following strategy don't work?
Your posted charts look great. Thx. Do you have any long or short order to accompany those charts, pls? It would help many others to visualize your trading results much more meaningfully.
Well, if you subscribe to olifxpro's arguments, then daytrading like this is difficult. very hard to do. These are TradeStation charts. Long entry is blue marker, Short entry is red marker, exits are white markers connected by dotted lines. This USD/CAD picture had those markers annotated for easier reading, two short entries circled in pink http://1.bp.blogspot.com/-Zx5W6EtWIIs/TdgJ54ePEcI/AAAAAAAAHeY/QZOD2v2LIag/s1600/USDCAD.png