Day trading or speculative trading is an excellent option in Forex trading for taking daily profits. It simply means you enter and exit the currency market within the same 24-hour period. You can hold a position anywhere from a few minutes up to several hours. It is similar to day trading stock or day trading futures, where you buy or sell a position and capture a profit based on relatively small price movements in the market. To become a day trader you must acquire as much expertise as a trader that stays in the Forex market for the long term.
How to Do Day Trading – Three Basic Levels
There are three basic levels involved in online day trading: beginning, competent and expert.
• As a beginner your primary focus is learning the basics of trading stock so you can develop your personal trading style. The best way to become comfortable with the process is to open a demo stock investment account before you trade with real money or do any forex trading.
• As a competent trader you begin to trade with real money. You develop sound practices such as sticking to your trading plan regardless of your emotional reactions to what you are seeing on the live market. Your goal is to manage your trades responsibly and achieve a consistent return on your investment.
• As an expert you have acquired a level of mechanical competence using a day trading system. You make consistent and profitable trading decisions based on the ground rules inherent in your trading strategies.
Acquiring an Efficient Day Trading Strategy
Learning how to day trade skillfully is worth the time investment. There are fortunes to be made but the real truth of the matter is the majority of individuals that trade stocks online fail at it. They don’t methodically acquire the education they need to be successful. The amount of correctly applied knowledge you have equates to the level of income you can achieve with an FX trading system. Most of us are raised in less than wealthy environments and we are taught to get an education leading to a job. We are not in the habit of doing what it takes to obtain financial freedom, so retraining the mind is necessary.
It is human nature to forget as much as 80% of new things we learn within the first three days. Over the next 18 days it dwindles away until we have about 3% retention. We have to apply it in order to hold onto it. Learning all the rules and strategies before you begin to trade is imperative, but then you must practice them repeatedly until they become unconscious habit.
There are over 150 trading indicators that you can use to devise a trading system that suits your personality. You can test your system over time to make sure it is working for you. Your trading software needs to contain 3 basic components:
1. It allows you to determine the current market direction.
2. The entry strategy is effective and consistent.
3. The exit strategy protects you against significant losses and captures the maximum profit.
Teach Me to Trade Currencies
In a stock trading course or futures trading class you will learn many of the basics you will need for trading the Forex market. A futures trading course gives you more insight into the market timing strategies that apply to entering the currency market. If you are competent at using stock trade tactics taught in a day trading course you already have a basic skill set.
The Gap Advantage in Day Trading
One of the advantages of FX trading systems is your opportunity to set a trading schedule that fits your style. The best trading software provides you with sets of indicators that allow you to take advantage of various market conditions, such as price gaps.
Officially the currency market does not kick off at a specific time or day. The main action is initiated on Monday morning in Wellington, New Zealand – the first financial center west of the International Date Line. For most of us in North America this corresponds to early Sunday afternoon.
The Sunday open is the point where currency takes up trading again after the Friday close (5 pm Eastern) in North America. By the time the market resumes after the break, you are likely to see significant changes in the opening price compared with the last closing price. Like all the other markets, the Forex market reacts to the news and events that occurred over the weekend. There is a risk inherent in the price gap, called the weekend gap risk or the Sunday open gap risk. Any time market prices gap like this, there is no tradable price in between For a person astute in day trading how to profit from the gap is one of the major day trading strategies.
Achieve Daily Financial Goals
The best trading system teaches you how to take advantage of any price movements influenced by the news. The Forex currency market is sensitive to major global events such as geopolitical conflicts, natural disasters, national elections, G7 meetings or military conflicts. There’s no way of avoiding what might transpire in the world, but you can learn to trade the market profitably in any circumstances using day trading systems. Using these day trading methods, you can set a daily financial target to enter the Forex market and exit within a few hours, cash in hand.
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