Have you ever heard of day trading? If you have been trading forex for a while, you certainly have. To those new to the concept of day trading, it is what every other trader that gets into forex is hoping to become an expert in.
So, what is day trading?
Day trading is a practice of trading every day. It is a situation where you treat your forex trade as a day job. Day traders, wake up, sit at their trading desks, and seek trading opportunities all day long. The question is, can you really make money day trading? How do you day trade successfully? what is considered a day trade? what is a margin call in day trading? what is end of day trading? what is the best trading platform for day traders? Let’s discuss day trading, and try to find the answers to these and more questions.
Day Trading Strategies
Regardless of how you trade, the aim is to ensure you end up in profit at the end of every day. There are two main strategies employed by day traders. They are scalping and position trading.
Let’s explore each one of them.
Scalping is a very interesting trading strategy. Imagine having to place hundreds of trades in a day. Scalping needs you to take many quick and successive positions. You need to keep an eye on the market and take a position when you anticipate that the market will move in a certain direction in the next few moments.
There are some risks to scalping. The idea behind scalping is to take as many positions as possible in a day and win a majority of them so as to rack of the profits. The profit margin on each trade is quite slim, and you, therefore, need to win a lot of trades in order to make a considerable profit.
The problem comes in when the market is being erratic. When the market is quite erratic, it tends to have drastic movements and changes. An erratic market can make it extremely difficult to make any profits from scalping.
It, therefore, follows that you will have a good day and bad ones while scalping. It is always easy to get excited or fearful while scalping. Anyone will get excited when they are on a winning streak, and start making an irrational decision. Never at any moment imagine you are being lucky on the forex markets. Always stick to your strategy, to ensure everything remains in hand even if something drastic happens.
Position trading is the opposite of scalping. Position trading is about long-term positions. The positions should be less than a day though, for it to be day trading. If you are doing position trading, you point out your exit point before you take a position.
That means that you have to take your time to analyze markets and collect information, that will help you determine where the market will be after a couple of hours. Usually, you need to explore the market charts over a previous period of a day or two. It will give you are a good perspective of where the market will be at the end of the day.
The same issue of erratic markets and unexpected changed affects position trading as well. For instance, there are issues such as politics that affect forex markets, and they have nothing to do with the price, or demand of currency. You might have taken a position based on the prevailing market conditions in the morning, only for a major political development to occur somewhere during the day. Such happenings usually cause the market to behave erratically and move drastically. It would be difficult for the market to end up where you thought it would be, and you’ll most likely lose money.
Position trading might be seen as easy by some traders. Once you’ve taken your position, you just need to some hours until the market gets to your chosen exit point. There are risks involved as we’ve outlined above, but if you can take everything into account while taking your positions, you should do just all right.
At this point, the most logical question would be; Can you make money day trading?
Making Money Day Trading.
The only reason you would choose to sit at your desktop and trade forex for a whole day is if you can make a living out of it. Yes! There are people who make a living day trading. Some people have made wealth from forex day trading as well. The difference is in how successful you are with your day trades, whether you are scalping or position trading.
Assuming, you are trading successfully, there is only one thing that makes the difference between a successful trader and an unsuccessful one. The trading balance that you have.
You cannot be trading with tens, and hope to make hundreds. If you hear of someone making millions, they are placing stakes worth millions.
Forex trading, whether day trading or any other form of trading is something you learn over time. You can read or get taught how to trade, but you’ll only become good at it if you actually get onto the market and actually learn how to trade and develop trading strategies.
It is also good to have a mentor who can guide you if you just getting started with day trading. Even if you are a seasoned trader, it is always better if you have a peer trader with whom you can brainstorm and share ideas.
Honestly, only a very small percentage of those who day trade can make money out of it. You have to be willing to do your due diligence in terms of learning the tricks to be among the slight percentage of traders making money from forex day trading.
You will come across a lot of ads and promoters claiming to be making lots of money day trading, and asking you to pay so that they can teach. They are usually just after your money. After all, if they were making so much money day trading, they wouldn’t be there trying to trick you to pay for some course.