Are you losing your nerves to understand what is forex day trading? If yes, then don’t. Day trading is simply a method of trading in foreign exchange market. It is a short-term style of trading where you can open and close a trade on the same day. You are free with the choice as how many trades you want to make in a single day.
In a day trading, traders pick any side when the day starts. They behave and act on their own way and end the day either with profit or loss. Usually, they don’t wish to hold such trade overnight but in some cases, day trading lasts more than one day. The deal then automatically gets renewed each night at 22:00 GMT till it is closed.
Remember, if this deal of day trading on forex is rolled for another 24 hours extra, you would have to pay a charge for this renewal.
Steps for forex day trading:
While the steps vary in different platforms, the 5 basic rules include –
- Choose your deal with currency pairs
- Choose your trading amount or investment
- Set stop loss order to manage risk of loss
- Make sure to constantly monitor your account to track its progress
- Close your deal when you wish to. If the set deal has reached stop loss mark, your account gets automatically closed. You can also do this with Take Profit approach.
That’s the way how day trading in forex is done.
Who performs day trading?
This kind of trading is for those traders who have ample of time in a day to analyze a trade, execute necessary strategies and monitor it from time to time. If you want to open and close a trade in a single day, you can surely go for day trading.
Again, if you are ready to monitor the market throughout the day while making an analysis at the day’s start, go for it. However, you should avoid making day trade, if involved in a regular day job.
One thing to consider – Once you choose to do day trading, take it as a mandatory point to stay informed and updated on latest trends and fundamental events. This will help you make appropriate trading decisions as the day kicks off.
What things should you avoid?
Most of the traders in forex day trading today are attracted by this high leverage game and follow certain wrong practices that end in losing everything they have. In the rush to increase returns, they make 5 mistakes that you should be careful about.
- Don’t take a position before any news announcement is made. Making money is not that easy. Hurrying would only reduce your chances to succeed.
- Again, trading just after a news announcement can also be risky. Wait for the instability to subside. Make sure to create a compact trading plan before making your moves.
- Don’t fall mistakenly across averaging down while day trading in forex. You might have to sacrifice both time and money.
- If you risk more, you won’t definitely earn more. So, don’t risk more than 1% of the capital in a single trade.
- Lastly, the most important thing, don’t start a trade with unrealistic expectations.
So, check out if you are matching up to all these criteria and start day trading on forex smartly.