As the largest and most liquid financial market in the world, it’s not surprising that the Foreign Exchange (Forex) Market offers several opportunities for traders of all areas to develop their own trading styles. One of which is Forex day trading which involves buying and selling currencies within the same day. The reason why this method has maintained its popularity is that a person can expand their net profit in a short period.
While day trading has its perks, it also has its fair share of risks. One of which is that it can be a dangerous game for those who are relatively new or have yet to create a well-thought-out method. Since not all traders work the same way, certain investors may not be able to handle the high amount of trade volumes made by day traders which can affect their overall strategy.
Key Forex Day Trading Tricks to Remember
With these features in mind, it is essential for traders to equip themselves with knowledge as well as be willing to take some risks. While the rate of successful Forex day trading isn’t always consistent, one can still enhance their skills by adapting the following tricks:
- Educate yourself – this involves updating yourself on the latest Forex market news and events that can affect prices like environmental concerns, political turmoil, and a sudden shift in prices.
- Set aside a fixed time and amount – Timing is everything and so is the amount of money you are willing to risk. Most day traders risk less than 1%-2% of their account per trade since they are on a fixed schedule especially when they’re tracking the market during trading hours.
- Time trades – this involves noting the time you made when you placed in an order and when you close a deal. This helps you create a pattern you can use for reference later on.
- Cut losses with limit orders – unlike market orders, limit orders help you trade with more precision by allowing you to set your price for buying as well as selling.
- Stay cool- sometimes your strategy doesn’t work, and that’s okay. Make a note of the few hits and misses you make and do better next time. The last thing you’ll want to do is invest while you’re not in the proper state of mind.
- Be realistic about profits – day trading provides you with the opportunity to expand your profit although it can also increase your amount of losses as well. Avoid falling into a notion that risking more than 2% is going to get you more.
Research is the Best Tool for Day Trading
When done properly, Forex day trading can be a great way to enhance one’s profit within a short period. However, since it’s an unstable form of trade, it can incur more losses when not managed properly. To prevent risks, traders must consider practicing on a demo account or at least equip themselves more with the market movement before trading in a large amount of cash.