Is Forex Day Trading For You?

Learn Forex Day Trading

How do you know whether Forex day trading is for you, in fact are you even sure what day trading is? The problem is many people are tempted by the promise of quick riches and jump in before they have any real idea of what they are doing. Admittedly Forex day trading is not as complex as some other markets out there, but it still has a learning curve to be mastered if you don’t want to be hung out to dry.

It makes sense before you start forking out any money to know exactly what you are doing and what sort of trader you are going to be. I know you want to be one who makes money, after all that’s why you are getting into it, but there’s a bit to more to understand than that.

If you have done any reading at all and it is to be hoped you have, then you would have seen terms like day trading, position trading and swing trading.

So what do they mean and what is the difference between them?

While it might seem to be stating the obvious, day trading is just what it says, putting in trades that can last from a few minutes to a few hours, but are all closed by the end of the trading day. Swing trading however, is totally different, this is having trades that can last from a few hours to a few days or even weeks. Position trading is having trades that last for months or years.

Each of these different types of trading utilises a different skill set. However, the focus of this article is to provide you with a bit more detailed information on Forex day trading.

The Day Trader

To be a successful day trader you need to be prepared to spend considerable time at your computer managing your trades. Day traders make multiple trades during the day, but they don’t have to concern themselves as to what might be happening to their trades in the market overnight, for the simple reason each their trades is closed within one day. The next day is another story as the process starts from scratch again, when they open new trades.

Day traders by nature are people that like to act spontaneously, making fast decisions, making instant judgement calls. Their normal day would follow a pattern of mixed profits and losses. Obviously the objective is to have more profit than loss; else you would soon be out of business. However, the astute trader can have more losing trades than winning ones and yet still come out in front. The way they do this is to cut off the losing trades fairly early and let the winning ones run.

To be a good day trader you need a system and a trading strategy. It’s also important to have signals to help with the quick decision making. But keep in mind not all time frames or indicators are suitable for Forex day trading.

For example a 1 hour time frame chart hasn’t got a lot of value added for day trading, whereas the one and five minute charts are extremely useful. One strategy would be to check for trends on the 15 minute chart, then compare with the 5 minute chart, to work out the entry and exit for the trade.

Not everyone finds day trading appealing, it requires a certain mindset, if you like living on the edge helps, but you need to be in control of your emotions and know when to cut and run, and be able to read the signals in more ways than one.

No related posts.