Forex Day Trading - Why Is It So Hard To Make Money?

Anyone who has ever tried their hand at forex trading will know just how difficult it is to make money on a consistent basis. It becomes a lot easier when you use a few technical indicators to help you find high probability set-ups, particularly when you focus on the longer term charts such as the 4 hour or daily charts, for instance. However it is significantly more difficult when you try and trade the markets on a short-term basis. So why is this?

Well the main reason is simply because technical analysis does not always work as well on the short-term charts. You only have to spend a few hours watching the 1 minute and 5 minute charts to find this out for yourself.

Similarly you will also find that not only does the price quite often move in a random manner during the day, but there will also be times when the price simply doesn't go anywhere. Therefore it becomes practically impossible to generate any profits.

To demonstrate this point, take a look at the 5 minute chart of the GBP/USD from earlier today:


Now normally you would expect the price of the GBP/USD to move quite significantly in the first few hours of trading, and sometimes in the overnight session as well. However today the price has remained close to the central pivot point all day so far.

You can see that the Supertrend indicator has changed colour several times so far, which indicates a change in trend, but any subsequent trends have been short-lived. You can also see that any breakouts that have taken place have run out of momentum very quickly. So any day traders attempting to trade the GBP/USD pair today will have found things very difficult.

I'm sure the price will break out of this narrow trading range and move away from the pivot point at some point today, but I just wanted to illustrate just how difficult forex day trading can be, even if you're a seasoned professional.

I do day trade the markets myself using a few of my own systems, as well as the highly effective Forex Morning Trade system (which kept me out of trouble today because the trading conditions were not met), but it's not something I would recommend for beginners unless you have a clearly defined strategy.

(Edit: Re the Forex Morning Trade system, I've just noticed that I looked at the 5 minute chart this morning instead of the 15 minute chart. There was actually a sell signal given which would have generated a profit of 40 pips. Oh well, I guess the odd mistake is inevitable when you're getting up at 6.15 every morning).