Introduction
Thanks to the recent booming popularity of cryptocurrencies, NFTs, and Metaverse, there are more fresh enthusiasts embarking on trading than ever before. Not only the crypto-market but other financial markets are benefiting from this movement as well, such as the forex market.
What is Forex Day Trading?
Forex day trading is basically a combination of forex trading and day trading, referring to the act of doing day trading on the forex market for profits by using short-term strategies. Let’s dive deeper into the definition of each concept.
What is Forex Trading?
Foreign Exchange, forex for short, refers to the process of transferring currency within a network of buys and sellers or changing one currency to another for a variety of reasons, including tourism, business, or trading.
What is Day Trading?
Day trading is a common approach and strategy to make money in the trading world, referring to the process of buying and selling certain financial assets on the same business day, thus generating small but consistent flows of profits.
What Makes Forex Day Trading Attractive?
The forex market usually has strong movements in responding to breaking news all over the world, making the prices of some currencies rather volatile. Its sensitiveness and high volatility pose an irresistible attraction to day traders despite the lurking risk.
Choosing The Right Pair for Day Trading
When it comes to forex day trading, there are indeed some pairs that just outshine others. However, to understand and decide which ones to invest in, the mere observation based on the size of the spread is not that practical.
Choosing The Right Strategy for Day Trading
Forex day trading strategies can be both technical and non-technical. It is highly recommended that traders remain adaptable when applying the following strategies to constantly changing market conditions:
Trend Trading
As a day trader, you must have heard this saying at least once in your life: “the trend is your friend”. Favored among novice traders, these strategies involve a straightforward approach as you try to join and look for trading opportunities hidden in the current trend of the markets.
News Trading
Hot and impactful news are your best friends as a day trader, allowing you to make significant profits if you proceed to make your trades just as the events unfold.
Social Trading
Social trading is a strategy in which investors observe the trading behavior of their peers and expert traders. The primary goal is to replicate their investment strategies through copy trading or mirror trading.
Counter-trend Trading
Somewhat similar to the trend trading strategy, the counter-trend trading strategy involves the process of spotting the possible end of the trend as well as the change in the movement, thus taking advantage of the price fluctuations.
Mistakes to Avoid When Doing Forex Day Trading
No achievement comes easy. You will certainly make mistakes when doing forex day trading. Then, only learning from them without giving up will take your trading game to the next level and one step closer to your dreamed profits. Check out the most common mistakes when doing forex day trading:
Not keeping up with the news: the secret of making phenomenal forex trading profit per day lies entirely in how quickly you receive and deal with the breaking news that is impactful to the market.
Not spending time enough to monitor your trades: some fresh traders just try to ride the trend but leave their positions unobserved, when they first enter the market in hope of making some money.
Not disciplined enough: when you catch an uptrend, it is relatively easy to give up early and make an exit for your trades.
Having another tough day job: being a day trader means being there and making trades in response to the fluctuating movements of the market.
Conclusion
Making money from forex day trading is indeed not an easy road. The forex market has its own pros, cons, and signature features for your consideration when choosing a financial market to invest in, choosing the right pairs, and the right time frames, as well as the right strategies to utilize.
Article source: https://libraryoftrader.net/forex-day-trading
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