What is day trading and who is it better for?
Relatively recently, the opportunity to trade on the stock exchange was the privilege of only the chosen ones. Employees of financial corporations, commercial enterprises, and brokerages were believed to have expert knowledge of currency and securities. Before the era of active development of the Internet, an ordinary person could not even imagine a career as a trader. Now the situation has changed dramatically, as a result of which even a beginner in Forex trading can carry out successful deals.
So, if the main time for your activity on Forex is the day and if you do not want to expose your financial portfolio to the risks that tend to affect the market at night, then perhaps your direction is day trading. Changes in the value of an individual asset during the day can bring you a profit, and various methods of assessing negative market trends can also play in your favor, increasing your income through effective analytical work.
Many people admire Kathy Lien’s business qualities, who is well-known as Managing Director of FX Strategy. Correspondingly, many of us want to achieve similar heights in the field of stock trading, finance and investment. Of course, the first step towards realizing such ambitious plans should be choosing the strategy that suits you, so it is likely that a Forex day trading bot can provide you significant support in making your first currency trades.
You probably have heard such terms as a “day trader” or “trading bot for day trading”. Why this particular strategy is based on a daily time frame, you can also learn from our material. Understanding the terminology will allow you to better navigate the Forex platform and save you from potential risks associated with losing your deposit. A beginner who is far from knowing good trading strategies may face a similar situation.
How to make $ 1000 via day trading? Are there the best indicators for Forex day trading? Or does it make sense to just download a pdf book about digital currency trading that will increase your income today? The answers to these questions are of interest to many people who are thinking about whether it is possible to make Forex day trading their living. In our review, we will give an objective assessment of this strategy, and you can make the right decision.
Successful Forex day trading strategies
Day trader
As a rule, day trading means such an algorithm for buying and selling a trading product, when all orders are opened and closed before the next day. An average day trader, according to summarized data, is a person with a good level of education and a reliable source of funding, from where funds come in a stable and uninterrupted manner. A day trader may use high-level leverage and his strategies are short-term.
Minor price fluctuations in the Forex market can enrich a day trader and bring them substantial income. The focus of a day trader’s attention is focused on those events and economic factors that lead to short-term changes in the currency market, cause short movements in it. This, for example, includes news trading, where a significant public or political event that affects the market acts as a catalyst.
Announcements of planned or predictable events in advance, for example, corporate or personal income, economic statistics or interest rates are highly dependent on the general psychology of the market. It is impossible to calculate everything with absolute accuracy, but it is quite possible to foresee the course of development of a particular scenario with an objective vision of the whole picture. If expectations fail, and in other situations even exceed the planned threshold, then the reaction of the currency market is inevitable.
Effective strategies
And now we will tell you what Forex day trading strategies are the most effective in 2021 and what their distinctive characteristics are. To make your first $ 100 via day trading and get a sense of the promise of currency transactions, you should pay attention to the following techniques and study their specific features:
- range trading (it is based on the use of support parameters in conjunction with resistance so that a trader can make an informed decision about entering into a trade);
- scalping (this strategy is aimed at making a small profit due to insignificant price fluctuations throughout the day, which is the source of profit for a day trader);
- high-frequency trading (an assistant Forex trading bot can be used here, the emphasis is on identifying short-term market vulnerabilities);
- trading the news (as mentioned earlier, high market volatility is associated in this case with high-profile news events and how this affects prices).
The prevalence of one or another strategy for Forex day trading will depend on your personal preferences, trading skills, awareness of market trends and the characteristics of your psychological profile. For example, what is the best strategy for an impulsive trader with an aggressive business demeanor may not be entirely suitable for a cold-blooded pragmatist. The interrelation of all these factors serves as a criterion for choosing a day trading strategy that suits you.
Key qualities of a day trader
In order to understand whether a career as a day trader is right for you or not, you should firstly make sure there are specific characteristics that are inherent in a day trader. There are a number of peculiar parameters, and you can rely on them when analyzing your own opportunities for Forex day trading. Let’s pay attention to the most important of them, since these are constant values for any trader:
- disciplined behavior and the ability to take responsibility for failures;
- well-thought-out trading strategy;
- experience and a solid baggage of knowledge about the currency market;
- capital sufficient to carry out deals.
Let us examine these statements in more detail. If we are talking about internal motivation for successful Forex day trading, then punctuality, responsibility and strict self-discipline are integral attributes of a day trader’s personality. Herein lie the roots of the development of an optimal trading strategy, since clear analytical thinking, coupled with good behavioral control, creates a solid foundation for the formation of positive professional skills in relation to Forex day trading.
Experience gives a trader the basic understanding of the various processes on the exchange, and when combined with knowledge, this combination is an excellent combination for potentially profitable day trading. In such a situation, a person can assume in advance what will happen in the currency market due to a number of provoking factors, and this also makes it possible to calculate his actions in advance in order to avoid losses.
The amount of capital is also important, almost paramount to effective Forex day trading. If the trader has little money and if it can be fatal to risk everything he has, then the expediency of making transactions under such conditions is questioned. Forex market experts warn: day trading is fraught with risks, so you need to have enough capital for its possible loss, and you also need to be internally ready for this.
Forex day trading for a living
Despite certain negative aspects of this strategy, more and more people are starting to consider a new professional path for themselves, namely day trading, as the main source of income, as something they can do for a living. Let’s think about whether this is possible and what is such a career realization. First of all, there are two types of day traders. People who work individually, exclusively for themselves, the so-called “lone wolves” do not like to feel like a part of any work collective or an organization.
Forex day trading for them is the execution of deals with the attraction of money from individuals, as a rule, these are the own finances of an individual trader or the funds of his colleagues. Quite often, traders of this type are associated with brokers. For example, day trading can take place through the TD Ameritrade brokerage platform, which provides novice investors and brokers opportunities to implement their trading plans.
Day traders who prefer to work not alone but as part of a company, have an advantage over individual day traders. This is because corporate traders have access to the trading table, high leverage, and enough money. One way or another, Forex day trading by default implies some initial data that both types of day traders should have, namely:
- multiple news sources;
- the ability to use the trading table;
- availability of software for Forex trading.
These are the most basic technical criteria that day traders must meet due to the fact that their activities are inextricably linked with the latest developments in the field of trade automation. A smart Forex trading bot capable of performing complex computational and analytical work for the trader himself and helping him make decisions about a deal (or opening and closing orders for him in automatic mode with imitation of manual trading) will come in handy.
Thus, good technological equipment, high-quality equipment, access to various sources of news and a trading table are the initial requirements for the implementation of trading activities in general and Forex day trading in particular. If you understand that you meet most of the conditions listed above, then wide horizons open up in front of you for successful and truly profitable day trading.