What is day trading? For the avoidance of doubt, let’s first understand what day trading is, and how it is different from other forms of trading. Day trading, in simple terms, is treating forex trading as an everyday job. It is a situation where you trade forex every day, just like an ordinary day job. Day traders like to describe themselves as professional traders.
So, the question is about how much money you can make day trading. The answer to that question is relative to so many aspects. Below, we outline a couple of dynamics that come into play when you are trying to make some money day trading.
One thing is certain, for you to make money, you have to be able to trade profitably. So, many the question should be; how do you ensure you win most of your trades while day trading?
How to Day Trade?
Day trading can be lucrative if you approach it in the right way. It is a risky way of trading because you have won a majority of your trades in order to cover for the trades you lose and make a profit. Most day traders usually use the scalping technique. You could opt for a long-term trade, but that’s usually quite risky as well.
Let’s elaborate on the two situations in a bit of detail.
Scalping involves taking successive short-term trades. That means you will be at your desk placing many short trades all day long. The idea is to take advantage of low-risk short-term trade. You have to keep an eye on the market so that you are able to take advantage of quick fluctuations.
The risk is there because any drastic change can interfere with your trading strategy or trading plan. Such changes could cause you to lose a significant portion of your stake. Keep in mind that the profits made in each of the successive trades are quite slim. One drastic change could cause a loss that wipes out all the small trades you had made.
If you take long term positions, you have to analyze the market for an appropriate position to exit your trade during the day. That requires you to do position trading. You have to determine your exit position before you take a position. It’s still dangerous if you cannot make correct predictions. Also, if anything drastic happens and the market takes a different direction, you’ll end up losing.
So, the answer to the money question is quite simple. It depends on how much stakes you are putting on the market, and whether you are trading successfully. If you can record a profit at the end of the day, then is a matter of how much stake you are using. If you stake hundreds, there is no reason as to why you shouldn’t make sever hundreds at the end of the day if you are winning a better percentage of your trades in a day.