Feb 8, 2018
Forex day trading for beginners
What is daytrading
Intraday trading, also known as day trading, day trading, or day trading, is a set of Forex trading strategies where trades are opened and closed on the same day. Assuming that the market can only show a certain amount of exercise per day, an intraday trader or daytrader or day trader uses relatively riskier trading techniques to achieve their desired profits. Forex day trading strategies are more active and require traders to be present on the trading platform during the session.
There is a fairly general consensus that the smaller the time frame the trader works with, the more risk exposure. That is why Forex day trading can be described as one of the most risky approaches to the currency markets.
It is not necessarily the various Forex trading strategies that day traders or day traders have to use that increase the risk. It is more that Forex day trading rules are more harsh and less forgiving for day traders who do not follow them. Mistakes are more costly and have the potential to occur more frequently, since trading with a day-trading approach has a high frequency in itself.
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Day trading and day trader Strategy - and how does day trading work
The two factors that no day trader can do without - irrelevant to the type of Forex day trading strategy used - are volatility and liquidity. This generally seems to offer opportunities for all traders, but short-term traders who day trading are much more dependent on it.
Volatility is the magnitude of market movements. When acting in the short term, solid volatility is a must.This brings the selection of suitable instruments more or less back to the major currency pairs and some cross pairs , depending on the sessions. Speaking of sessions. since volatility session is dependent, knowing when to trade is just as important as what to trade.
Liquidity is just as important. Acting in very day is very precise. A long-term trader can afford to add 10 pips and 10 pips off. A short-term trader can not do this, because 10 pips, for example, can be the entire intended profit for a trade.
This precision comes naturally from the skills and experience of the trader, but good liquidity is also important. When there is no liquidity, the orders will not close at the desired price, no matter how good the trader is. This limits the intraday traders who want to daytrade in the selection instruments and times. Read more about Forex trading and the best days of the week .
Here are the three most popular Forex day trading strategies for very short-term investing.
Day Traden - Daytrader Scalping
Scalping focuses on making many small profits on minimal price movements through many trades. Scalping can be very exciting and exciting but also risky. The trickiest thing about scalping is probably the closing of loss-making trades on time. A scalper can not afford to wait until the market moves in a favorable direction again.
Become a scalper day trader or become a day trader? Then look at volatile instruments, good liquidity and perfect order execution speed. When properly mastered, scalping is potentially the most profitable day trading Forex or day trading CFD strategy. It is only the associated risks that prevent it from being the best Forex or CFD day trading strategy. Also read: 1 minute Forex Scalping Strategy .
Day trading - Intraday Reverse trading
This is undoubtedly a very tricky Forex and CFD intraday trading strategy, especially when used by inexperienced traders.
Reverse (reverse) trading is also called pull back (withdrawal) trading or counter trend (against the trend in) trading.
The risk lies in the basic principle of acting against the trend. A reverse trader must be able to identify potential pullbacks with a high probability, as well as to predict the strength. Although it is not impossible, it requires a lot of market knowledge, experience and practice.
Daytraden - Momentum Trading
This is a relatively simple day trading Forex and CFD strategy that looks at strong price movements accompanied by high volumes, and then acts in the same direction. A high level of discipline is needed in momentum trading , to wait for the best opportunity to open a position, and a solid control to stay focused to spot the exit signal.
Day trading is often advertised as the fastest way to make a profit in Forex trading. However, what the ads often forget to mention is that it is also one of the most difficult strategies to get the hang of. As a result, there are many traders who try and fail. The average income day trader? That is actually not to say in advance and there are also few statistics to be found. It all depends on how you organize and operate this strategy yourself. Here below some tips. Also read: What is the average profit for a Forex trader .
Forex Day Trader and Day Trader Tips
Practicing day trading is the least popular among professional traders and the most popular among beginners and inexperienced traders.
Are you a novice, this is the most important Forex day trading tip: stay away from day trading. First try to be consistently profitable on a live account for at least a year with long term trading strategies. The more experience you gain, the more and better you will be able to handle shorter time frames. If you decide to trade day, here are some Forex day trading tips that might help you.
Daytraders learn for beginners or a daytrading course or a day trading forum and day trading for dummies usually starts with research. Beginners are often looking for ways to improve their trading and often spend considerable time and energy searching for the holy grail. The Holy Grail in Forex is what traders call a perfect indicator or a trading system that offers trade setups with 100% success. Unfortunately, perfect systems do not exist, and the only holy grail is money management .
The best day trading software for beginners is without a doubt the MetaTrader 4 platform because you can also trade in micro lots.
- Open a demo account using the MetaTrader 4 platform
- Choose a strategy from one of the webinars .
- Deal with the strategy on the demo account until you are consistently profitable.
- Act on the demo account exactly the same as you would 'real' money on a live account.
- The habits that you develop on the demo account have to be transferred to your live action unconsciously.
Develop a trading plan and follow it strictly to manage your risks in the right way. As mentioned earlier, Forex and CFD day trading is generally more risky than long-term trading, particularly because of the higher pace and frequency of trades. Day traders or day traders experience more pressure and must be able to make decisions quickly and bear the full responsibility of the results. A trading plan is an absolute must for a daytrader.
Try to keep your loss-making trades open too long. Connect loss-making trades in accordance with your proposed exit strategies from your trading plan. Remember, if you keep this kind of trades open too long, they will not only consume your profits but also your time.
What about a stop-loss? There are two types that a day trader must consider.
A physical stop-loss order placed at a price level that is in line with the risk tolerance, which you should have determined in your trading plan. Around 1 to 2% is generally seen as a good level. This is more or less the most you can afford to lose in one trade. The other type is a mental stop, and this is one that is triggered by the trader when he feels that something is not going well.
Have you ever opened a trade and then saw the market make an unexpected move, where you realized that this trade was not such a good idea and that it is time to close it? That is a mental stop. The trick is not to confuse it with panic. That is why both physical and mental stops must be considered and thought through before you open a trade, and not just after it.
Retail traders often have another rule to which their stop-loss must comply. They set a maximum loss per day that they can have financially and mentally. When that point is reached they stop trading for that day. They know that nothing good comes from emotional action. Inexperienced traders, in contrast, often do not know well when to stop. They often feel obliged to make up for the losses for that day before the day is over, which can lead to 'revenge trading', something that almost never works out well.
Exceptions to these rules are possible, but must be managed with special attention. Good results should not let you be tempted to reinforce exceptions. Bad results should be seen as a reminder why these rules exist.
Also always be very careful with trading around major news or events or avoid trading all the way around, unless there are really specific market conditions that emerge from your trading strategy. But be careful!
Even if you know more or less what the news or announcement will be, it remains very difficult to predict how the market will react in the first few hours. Bullish news can cause a bearish reaction and vice versa.Eventually the market will return to the trend, but until then, it is difficult and risky to act.
Also keep in mind that a trader can not always protect his / her account with stop-loss orders during the news. When there is no liquidity on the market, the order does not close. The order remains open until the first available counterparty is willing to act. You want to have a strategy that is based on prices on which you are willing to act and to open and close your orders.
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