You Can't Day Trade Forex Without Conviction

I try my best to strike a balance, and offer as much insight as I can to both longer term “investor types” as well those “short-term traders” looking for a little more action in their day-to-day.

I’m often confronted with “frustrated short-term traders” dissatisfied that suggestion of a “stronger Yen” or “weaker dollar” on any given day – did not provide the desired “instantaneous result” of  being made a millionaire overnight. Over leveraged and grossly under funded these short-term traders are quickly taken out, as the industry’s  own marketing strategies are fundamentally built upon this “promise” of instant riches.

You can’t day trade Forex.

No matter what you think, and no matter how many “bells and whistles” you’ve got on your charts, no matter how many “small wins” or perhaps even with a few “larger wins” the inherent volatility on smaller time frames will reduce your account to zero – long before you’ll ever  set up shop on the beautiful Caribbean ocean , bikini clad babes and tequilla in hand.

You must learn the fundamentals, as you’ve no conviction in your trading otherwise.

A quick “spike” here or “dip” there and you freak out / stop out with absolutely no conviction behind the trade – because in reality – you really have no idea at all as to “what the trade is even about” anyway. Without a fundamental reason for taking a trade you will never have conviction, and without conviction – you’re just a tiny fish getting smashed around in the surf.

I pop in and out of trades on smaller time frames all the time – only in that I’ve already got the larger time frames and the fundamentals “behind the trade” to begin with. This takes time and a considerable amount of learning but is absolutely key if one hopes to survive.

9 Responses

  1. devilyell July 18, 2013 / 8:50 pm

    Kong, Kong, Kong,

    You have vitiated everything I have come to know and love. That is everything the guru, to whom I paid $4,000, taught me.
    Leverage, what is leverage? And why should I care?
    The bigger picture, what is the bigger picture? And why should I care?
    Fundamentals, what are fundamentals? And why should I care?

    If you expect me to abandon my dream of quick and easy love and money, you are wasting your time.
    So saith my guru.

    A few bucks remain in my account. If I just stick with it, it will all work out. Plus, I can always take a second mortgage.
    Try not to be so negative Kong!

    • Forex Kong July 18, 2013 / 11:19 pm

      He he he he…..well perhaps I can save a couple new comers a couple of bucks.

      It’s interesting though – as I “got involved” with forex “because” I enjoy studying / researching the fundamentals, where as most people really don’t care for it so much.

      I enjoy the technical elements as well – but really get a charge out of understanding “why” a currency moves against another moreso than “how much”.

      The allure of easy / fast money is a killer, and as time goes by I find that my investment dollars spend far more time “just sitting there” than exposed to the market / risk. Then when pulling the trigger – boom! I generally see green on the screen.

      I’ll try to “pep things up” a a bit Dev – thanks man!

  2. schmederling July 19, 2013 / 12:24 am

    Good post Kong – always good the keep things in perspective IMO…. there is no ” FREE LUNCH” anywhere…. the Fed will learn this lesion are the cost of collapsing the US economy with the DXY…… The laws of the universe will continue to stay consistence relative to ” Making something out of nothing” this is a loosing mind-set from the get-go….. The US has been trying this since 08 – how’s that working out….. lot’s of pain coming in the near future. Most of MS people think the US in in recovery…… & the majority will be hit by the MAC-Truck racing down the HWY to try & pick up a few pennies…. IMO

    • Forex Kong July 19, 2013 / 12:30 am

      It is a grind at times ( fighting the fed etc ) as markets have certainly been lulled into believing their is recovery in the U.S I don’t think I can remember a single time in my career where the “crowd” will likely get dinged as badly – sitting on the wrong side of the fence.

      This “Ben’s got your back” malarky is the absolute dumbest thing I’ve ever heard.

  3. devilyell July 19, 2013 / 1:01 am

    Right on Kong & Schmed.

    Schmed, you are supposed to be fishing.

    Somehow kicking the can and borrowing to do so has become synonymous with improvement, progress and all is well?!
    Wishful thinking for the sheeple.

    Kong, I have learned by stat analysis with huge samples that one day’s up or down has no bearing on the next day’s up or down. That is regardless of the larger trend or macro fundies in play.
    I now approach day trading with a counter intuitive mindset to ignore any directional bias. Not so easy to do. I simply go with whatever my short term TA indies display. My basis is that most pairs move a penny a day because brokers live to fill orders and big fish create adverse moves to take possy’s away from little fish. My day trade goal is to snag a part of that penny, up, down or sideways.

    All of that sounds contrary to your post. What makes it OK for me is that I know most intra day is noise. Trading noise leaves no room for trading on hope. Take your losses like a man. I have a gimmick or two that helps me look behind the curtain of that intra day crap. It’s better than day time TV.

    Please elaborate:
    Interest rates remain unchanged for months yet the expectation of interest rate changes from moment to moment.
    GDP, Unemployment and other benchmarks are unchanged for weeks and months yet any minor change from what is expected on the econ calendar causes crazy spikes.

    I want that bikini clad hottie. But my account is small so I should trade a teeny and stay with it until the fundies work my way?
    Maybe quit day trading and wait for the market to hit a level that jives with the macro?
    What is a girl to do???!!!!

    Maybe you can get some of us out of the fire and back into the frying pan.

    Thanks again.

  4. tio July 19, 2013 / 6:08 am

    yep … lucky i trade with not knowing fundamental ( my honest confession ) . Following King under hidden forest basically I just follow his trade on a fly. If someone hibernate on Playa de Carmen said … hi dude and jude… i sold all USD pair round 1 (and don’t tell this trade to spreadbetter on FF,please) … then not more than 15 minutes i opened my laptop, i click and go my charts aggressively … and politely AND i don’t know its my hunch or my greedy .

    After find this blog, i got my attention on it (especially this day you as you talk again). but (again) i wonder how you Kong get conviction about all USD will be sold soon, while USD index grinding up and up (and “the expert” said USD will go up ). At that time ( about 5-7 day ago), my heart spin fast because my drawdown almost 60 % of the balance … BUT i keep trust and after about one week USD ranging and grinding up then …. BAM .. my charts speak louder to me on the morning .. woohoo .. wada … Thanks Kong, its most beautiful tittle for me. And beautifully hard to find in myself.

    • Forex Kong July 19, 2013 / 9:01 am

      You are scaring man! a 60% drawdown, based on some of my trade suggestions / advice? EEEEkkkk.

      You know that I place several smaller orders over time so……please, please be careful with your money management. That seems a bit “too large” a swing for me buddy.

  5. timfrec July 19, 2013 / 6:23 am

    How you can so sure Kong .. ooh .. where is my conviction ?? i look around .. around .. inside … above … but not find it ..yet. My lucky

  6. Deano July 22, 2013 / 1:21 am

    Wise words again Kong. I have a few guys down here in OZ that are looking for quick wins hourly and daily and wonder why they are not growing their account. Too many trades means poorer setups, hasty exits, mixed results and no account growth, whereas fewer trades and better setups with planned exits leads to better results and account growth (well anyway this is whats working for me). Some just don’t get that and need a market “fix”. And fundamentals – if you don’t understand them and the interconnections between markets then you’ll never make money no matter how good a technical trader you are (imho). Its like being the best shot on the range and having to do it blindfolded! Duh.

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