What is day trading?

Day trading has more trading frequency than swing and position trading and most of them close orders during the trading day. So the timeframe in which they enter trades is relatively short, usually M30 or H1 with a tight stop loss, up to a few dozen pips.

Why Day Trading Doesn't Work?

First of all, it's not that day trading can't be profitable, in fact there are many successful day traders. The problem is that it is very difficult to get consistent and sustainable profits.

Most traders are attracted to day trading because of its fast-paced, many trading opportunities. Often traders are not patient and disciplined enough to wait for confirmation trade setups on large timeframes like H4, D1, ..

However, the fact that the short time frame is the time frame contains many risks, it has many signals and can cause traders to experience constant losses. Before they can be wise and objective enough to make a profit, they have to overcome the psychological barrier first. Most traders break the ball at this stage.

Maybe your trading method is very good but you have to keep in mind that, there are many factors that can reduce the probability of a trade even if your setup is qualified.

For example, on the low time frame, there are frequent fakeouts (false breakouts) and in this case, the stop loss does not seem to help much. Or, when the market has news that causes the price to rise and fall suddenly, it can also make you stop loss immediately.

Why is day trading so difficult?

There are many reasons why day trading setups are less effective than medium and long term setups. As:

Lots of noise during the day

One study found that intraday price movements were the least predictable, followed by medium and long term.

It can be seen that speculation and reactions to the news are believed to be the main reasons for the erratic movements of rates in short-term time frames. Day traders must learn to filter important price moves in order to make a profit.

Unreliable low timeframes

One of the factors that makes day trading predictably low is the unreliable low timeframes. False breakouts occur frequently on this timeframe. That is why day traders should have full knowledge before entering day trading.

According to the same study mentioned above, bandwagon effects (i.e. crowd behavior) tend to magnify certain price movements and combine with overreaction to news can create fake breakouts and potentially lead to many losing trades.

Stop-Hunting (Stop-Hunting)

The low time frame is also a big problem for this.

Hunting stoploss is a phenomenon that often occurs in trading, especially for the forex market. Brokers use their methods to increase or fake the exchange rate of a currency pair until a large number of stop-loss orders are triggered.

These moves can cause the price to have sudden increases and decreases and appear candles with long tails. It is also the cause of false breakouts on short-term timeframes.

To limit this, it is very important that you work with a reputable broker.

The influence of fundamental news

Important news, events, meetings of large organizations all have an influence on the price movement of the day. A piece of news can cause the price to fluctuate wildly, making the risk of stop loss for day traders much greater.

Day traders often take profits early

Day traders do not hold positions overnight, this can help them avoid potential risks but it also means they miss out on profits if the price continues to move in their favor.

It can be seen that, for effective day trading is not easy, traders must learn to deal with difficulties before embarking on trading. Otherwise, you will not only make no profit, but also lose a lot of money.

To really make a profit from day trading, you will probably have to practice, experience and learn a lot. However, first prepare yourself with all the necessary knowledge before embarking on trading and remember, always practice and trade with a plan.