This post marks the beginning of my forex day-trading adventures. I’m going to move into the world of forex day-trading, face the day-trading beasts and hopefully come out alive on the other side!

I’m currently preparing myself to start day-trading activities. To be honest, I’m not that great a day-trader simply because I prefer trading on the longer time frames like the daily charts.

However, trading on longer time frames also means that trade set-ups of good quality occur much less frequently, resulting in longer waiting periods where there is nothing to do but wait.

That’s where the attraction of day-trading comes in. A day-trader has more trading opportunities and can compound the returns on his account more frequently.

While this means the opportunity for higher profits is there, dangers also lurk for the traders who aren’t properly prepared for day-trading. I’ve been there, and I’ll be applying the lessons I learnt from past experiences of day-trading to the forex markets.

As always, I will first highlight and address the risks of trading to help you become aware of what are the possible pitfalls that ensnare the unwary day-trading traveler. But this is more to caution you not to fall into these traps rather than scare you out of day-trading.

Once you become aware of these traps, the next step is to prepare for them and avoid them whenever possible.

However, focusing on the “dangers” alone creates unnecessary fear and stress in the trader. So once these dangers have been addressed in your trading preparation, it’s time to “forget” them and move into the mindset of a successful trader.

Managing The Risks of Day-Trading

Day trading allows many opportunities to trade, and can be an incredible fun (or very stressful) environment to trade in. Emotions can run high, and the conscious mind can be easily short-circuited by these very emotions. That’s why short-term trading requires even more preparation and skill to be successful.

Over-Trading

With these several trading opportunities available, the unprepared trader will tend to over-trade. Over-trading isn’t a good thing. But why does over-trading occur?

One reason why over-trading occurs for day-traders is because when they hit a loser, emotions start running high. The need to “get back” the lost money causes the day-trader to start taking trades in the hope that money lost will be rescued.

This can be managed by deciding beforehand the maximum number of trades allowed per day.

Taking Unnecessary Risks

Other reasons are simply taking once day-traders starts hitting a string of winners, they get overly excited and begin to take unnecessary trading risks. Risks like taking position sizes too large for their accounts, taking too many trades, bending their trading rules and over-riding their trading systems.

To curb this tendency, the day-trader needs to be aware of their emotions and preferably have a trading check-list to run through before any trade can be executed.

Maintaining a trading journal also helps to raise the self-awareness of the trader. The thoughts, emotions and reasons why trades are taken can be kept in this journal, and through consistent review the trader will raise their trading consciousness for improved results.

Lack of Proper Back-Up Procedures

Lack of proper back-up procedures also result in losses. For example, during the trading day the connection with the trading platform may occur. If there are no hard-stops in place, trades could go into really huge losses before connections are restored.

By then, it may already be too late to save the account.

Take A Mental Walk-Through Your Trading Process

To properly prepare for day-trading success, as many forms of risk must first be taken into account. From number of trades a day, percentage of account risked per trade, the actual management of the trade and back-up systems or alternatives in the event of non-trading related events happening.

One of the best ways to do this is to take a mental walk-through your trading process. From preparing for the trading day, the execution and management of a trade, to the end of the trading work day.

Preparations for some of these risks are more important than others and it depends on how you are going to actually trade. No doubt it takes time to think through the possible risks, but once you know that you’ve accounted for as many of these risks as possible it gives you the confidence to start trading properly.

Preparing for day-trading risks is akin to setting the foundations in a building. The stronger your foundations, the higher the building can go.

But without proper preparation, once the winds start to blow or the earth starts to shake, your day-trading empire and dreams can crumble all around you in a hurry. So it’s worth taking the time out to prepare for your trading success, right?

Some Preparations for Successful Day-Trading

1. Have a good trading system.
2. Have a properly mapped out day-trading strategy
   (this is different from a trading system)
3. Get mentally prepared to trade before starting the day
4. Tested out your day-trading process from:
   1. Trade Opportunity Identification
   2. Trade Opportunity Qualification
   3. Entering the Trade
   4. Managing the Trade to Completion
   5. Reviewing the activities and actions taken during the trading day to learn from them.

Preparing For My Day-Trading Adventures

With this in mind, I’m preparing the foundations for my day-trading adventures. I expect to trek through the jungles, face the wild beasts, and return with the treasure! And then go through it again and again and again.

I’ve selected the 5EMAS Forex Day-Trading System as the trading system I will use to navigate the day-trading waters, and hopefully return with the treasure.

Will I make it? I certainly hope so! The initial steps have been encouraging so far.
But to be clear about this, my trading results from the 5EMAS Forex Trading System are solely down to my ability to implement the system, and the preparations that I have done.

I am not that great a day-trader, nor do I claim to be one. I’ve read through the manual, taken a couple of trades, and feel that it has great potential for day-trading profits for the trader who can implement it properly.

The 5EMAS Forex Trading System could blow up in my face, while other traders may end up taking home the gold.

However from what I’ve studied, it’s a sound day-trading system which requires some practice to get it right, and I think for the right trader, it will work to produce amazing results.

The only question now is if I’m suited for day-trading on a shorter time frame!
What I will do is create a page on this site where I will update my trading results from the 5EMAS Forex Trading System over the next couple of weeks. When that page is set-up, I’ll update you through this blog.

So stay tuned for my day-trading adventures with the 5EMAS Forex Trading System.