Day trading on the Forex market. What is it? Lure of brokers or trading style that can bring potential profit to the trader? Opinions about it among traders and analysts, are in any way connected with trade in the markets diverge. Let’s try to understand what it is and is the game worth the candle.
The benefits of day trading include the following points
- Independence from global news affecting the markets. When the collapse of the markets intraday trader will close or open the opposite position, while a long term trader can expect a deep correction and the continuation of the movement.
- Low risk subject to certain rules. Also important factor is the use of a small Deposit. The profit potential is achieved by a large number of transactions.
From disadvantages it is necessary to mention one — the most important
- Trader have a lot of time on the market. Not everyone is able to cope with psychological stress from constantly changing the prices on the chart. Lack of training leads to errors and loss of control over their actions.
Let’s try to understand the fundamental truths that will help intraday trader to become more successful and bring their trade, so to speak, to a new level.
One of the misconceptions traders — the neglect of psychological factors in trading. Archimedes said, “Give me a fulcrum and I will lift the Earth!”. Of course, that no he did not give it. And all agree with this fact. Most traders shout: “Give me a sign and I’ll be rich!”. And absolutely do not want to accept the fact that the ideal entry point simply does not exist, as well as props to raise the Ground.
There are certain rules under which intraday trading in the Forex market can bring potential income. So, let’s begin.
The first rule — choose a timeframe
For intraday trading perfect using the hourly chart. The H1 has far less market noise no matter which trading style you are using, be it levels of support or resistance or indicators. Also for the psychological state of the trader, this is not such a burden as constantly changing prices in the eyes, leading to mistakes and rash decisions in opening or closing transactions.
Not the quantity but the quality
Before you schedule any currency pair. You are in front of a computer monitor. What kind of deal to open BUY or SELL? Jumped on one timeframe, then another. I want to open a trade and to earn. Opened: one stop, second, third … don’t want to catch a stop again, move the come on lower price now developed. A familiar situation? It is called trading at random!
You must follow any system of rules, having a Foundation. Indicator candlestick setup or levels. We have all heard the saying — “Water wears away the stone.” One deal will not make you rich, but a few high quality trades without permanent changes to the rules and jumping from one strategy to another can lead to the growth of the Deposit. You have determined a trading strategy and test it on history. Now the case for small — to abide by its rules.
The number of instruments for trading
Day trading requires precise and quick action. Time to make decisions not so much. A large number of tools rassredotochit trader, in the end, missed the signal, and as a result jump in the passing train. And it’s not really a good idea. Pick a few tools, focus on them, their behavior and the news that and how it affects their movement. Become proficient on these instruments.
Risk no more than 1-2% of the Deposit
Someone will say 1-2% is very small. Of course, a little, after all, and profit will be less. But for a trader priority should be a stable growth of Deposit, and not the drain at the first loss.
When trading intra-day trader is very big psychological burden: if you suffer a series of losing trades and a risk of 10-20%, the Deposit decreases very rapidly. There is a desire to win. Your emotion that leads to rash decisions and further losses. You have to be prepared to lose that percentage, which set. There must be a certainty that the loss of the interest you will not to worry much and to open transactions big volume hoping to get to breakeven. Take what you can afford. The main aim in trading is to make money not much, but steadily.
Money Management is the subject of a separate article, and even articles is not enough. And to ignore this is impossible! Even the best strategy will be unprofitable if the wrong risk management.
News and causes of price movements
Of great importance is played by the release of various reports such as unemployment, various indexes and other. Most of these news are not able to set the trend for the currency pair, but capable of in a day to turn the price in the so-called “saw”. Stops set by the trader, not always is able to stand, and as a result a large number of losing trades.
Every self-respecting broker is economic calendar. Trading within the day, you should look at it in the morning to mark important events and to refrain from opening trades during these hours.
Set realistic goals
It is, rather, about the limits and self-discipline. If the daily volatility of the currency pair is 50-70 points, it is not necessary to aim a blow at 100-150 points.
The second rule is limiting the amount of damages
There are days when we can observe a high volatility of the currency pair, but you should always take the average number. If you limit your daily loss, for example, 50 points, then calculate how much time will be able to sustain your account. But the market is changing: the losses are profits and Vice versa. And how sad when you see on the chart a situation, your strategy would bring you profit, but, alas, the account is already empty.
A very grave error intra-day traders: if trades are conducted within the day, why is the signal received on the hourly chart, should set the trend in your favor again tomorrow. This is a completely different strategy, with different rules, entry points, etc.
In conclusion, it can be noted that for a trader, trading within the day, important discipline and adherence to rules. Cold calculation, not going on about the emotions. Simple observance of the above rules will allow you to trade and provide an opportunity to make a profit.