Day Trading refers to the Forex trade executed on a single day which expires at the end of the same day. Even though a trade to can be placed to expire in days, weeks or even months, many traders prefer day trading as it allows them to make a profit in a short time. However, there is considerable risk in this type of trading as it necessitates the use of riskier techniques to make profits. Hence, day traders should select the best day trading strategies Forex in order to become successful in the long run.
Coming Up With a Right Strategy
Two factors that day traders have to keep in mind irrespective of their plan are volatility and liquidity.
Volatility is the scale of movement in the market. This is important in short-term trading as it eases selection of instruments to major currency pair and limits cross pairs.
Similarly, liquidity is vital as day trading has to be very precise. For example, long-term traders have the option to deal with various pips. However, a day trader only has a limited number of pips to deal.
3 Best Forex Strategy for Day Trading
This Forex day trading strategy involves making several small earnings on marginal price changes. Scalpers have an interest in quantity trades and must reach high trading probability to balance the low risk to reward ratio. Traders must have a good eye for identifying volatile instruments, flawless execution speed, and good liquidity. If used correctly, scalping can be the best Forex day trading strategy.
- Reverse Trading
This strategy is unsuitable for inexperienced traders especially beginners, as it involves trading against the trend. Reverse traders should have skills to identify potential pullbacks with a high prospect, in addition to being able to predict their strength. This strategy requires a lot of practice and a considerable knowledge of the market.
- Momentum Trading
This strategy is pretty simple, specializing in looking for high price moves along with high volumes and trading in the trend of the move. Discipline is needed in momentum trading to wait for the best opportunity and focus on spotting exit signal.
Tips for Successful Application of Best Strategy Forex Day Trading
Always identify and implement tried, tested day trading strategies.
Have discipline in the execution of the selected strategy.
Stick to a sound money management regime.
Find the trend to identify the highs and lows
Remain patient and wait for the perfect trade
Employ larger stops and less leverage
Forex day trading is slowly gaining popularity with each day and is the best way to earn money in the shortest amount of time. However, just implementing the best day trading strategies Forex is not enough, as traders need to commit their time to succeed at it. They should spend considerable time researching the various concepts to get a better understanding.
So begin by researching good Forex day trading strategies and start trading today.
The content of this article reflects the author’s opinion and does not necessarily reflect the official position of LiteForex. The material published on this page is provided for informational purposes only and should not be considered as the provision of investment advice for the purposes of Directive 2004/39/EC.