Day Trading the Forex Market for Maximum Profit

Strategies and Advantages of Forex day Trading

The Forex market is no doubt an attractive one with its three trillion dollar turnover. However, this is not a market for those who are not prepared to learn about it fully before making their move. Day trading is a very good strategy when looking to enter the market, but one must not presume that it is an easy one and does not require any research, study, and of course practice.

What is day trading?

Begin by understanding what the concept of day trading entails. Here, the trader will enter and leave the market several times a day. The trades here are short lived and one does not hold on to the currency pair overnight. This is a very good strategy for those who are happy with smaller profits and are not looking to invest long term in the market.

Forex advantage of day trading

While day trading is a common strategy of other markets, in the Forex arena it has a big advantage as well. Since the Forex market works around the clock, the trader has the conveniences of entering at any given time and exiting upon will. There is no marking closing which will force the trader to give up the deal. This means that day or night a day trader can enter the market and as soon as the trade falls one way or the other, he/she can make a move and exit.

Factors to keep in mind when day trading

As a Forex trader you must develop a few techniques when you decide to day trade in the market. Some of them are listed below

  • Keep in touch with the market – As a day trader you are not concerned with the long term market perspective. Instead you need to focus on the short term fluctuations since it is these that will decide your profit or loss. So, once you enter the market watch it like a hawk. The minute things turn in your favor, make your move and exit. Remember that while the gains here are quick, the losses can be rather fast too so watching the market and exiting before the situation goes out of hand is important. You should always make sure you are well informed by forex trading news.

  • Establish loss and gain limit – Before you enter the market decide at which level you will leave the market. So in case things are going south, you should have a loss limit ready. Once this limit is reached, you have to exit the market since this is a clear indication that the trade did not go your way. On the other hand, the profit goal also needs to be identified. In day trading one can fall greed rather quickly and want to hold on to the pair for longer in the hope of making better profits. If you have a pre-set profit goal in mind, you will be able to make your exit as soon as this point is reached. So having the loss and profit limits decided is very important here.  

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