Thursday,Nov 5 2009, 07:45:35 AMDay Trading System – A Never Winning Game

Almost every day we see claims about day trading system that it can make you huge gains; but when you will ask for real track record, most likely you are going to get nothing. By its very nature, in day trading systems you will lose your money. A few of the following aspects are discussed below which throws light why it happens.

Before venturing into day trading system, always ask for the real time track record over a fairly long period, say about two years or more. To the extent possible do not rely on hypothetical track record. In fact anyone can win with a hypothetical track record but hypothetically only which is worthless.

Always keep in mind that short term moves are random. Every day trillions of dollars are traded in currency markets and within any daily period the short moves are random. A day trading system is like flipping a coin where your odds of winning are the same.

Most of the trading systems bang on about keeping losses small; stops are generally taken out creating a loss. Further, there are great chances of your losing as there are high chances of your being taken out.

Although there are numerous odds of being stopped out, but a day trading systems keeps your losses small. This system does not appear to take care of the essential aspect of making money on Forex. Usually there are short term profit targets in day trading systems and the system is satisfied with any profit it earns. So, the result is numerous small losses and no real profit to replenish them; and you are wiped out quickly.

There is another fantasy associated with day trading system that these systems make money; on the contrary, through these systems you not only lose but very quickly lose your equity. The day trading is usually done either out of greed or out of ignorance of intricacies involves in it. Most of the vendors who announce publically about sales of day trading system are those who have never traded and, of course, made money out of sales of these systems. Their earning is accrued from book sales and not from trading, therefore, they always earn and you are at the receiving end. For instance, there are systems who promise 90% successful trades with a few hundred dollars. Just think: if that is the success rate, why should one sell it, why not make millions of dollars for him.

There is only one formula of success in trading in currency market, that is, you will have to be realistic and sensible.