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ℹ️ How to Day Trade in Forex Market?
Day trading was not possible for everyone until recent years, but with the help of technology, it is now possible. There are some things you need to check before you start day trading. We will talk about all necessary things required to become a day trader in this trading tip.
Time: The first and most important thing you will need is the time, lots of time. You are going to spend a lot of time analyzing the markets, managing your trades, planning your next move so if you think, you can manage day trading along with your job then you are wrong! Please don't do it. It will adversely affect both.
Tools: The second thing you need to make sure is that you have all the necessary tools required for day trading. These tools include at least two computers, main and backup fast internet connection, scalper friendly trading software with instant data feed, a backup data feed, a broker who has low commissions, instant and consistent execution. You may also need multiple screens although it's not compulsory.
Strategy: of all the things mentioned above, having a good strategy is the most important thing. A good strategy should be complete and well written. A good strategy should cover all aspects of trading, i.e. from entering the trade till exiting it, everything should be objective. It should be tested both ways i.e. forward and backward. A good strategy will help you control your emotions.
There are many day trading strategies available to use or you may develop your own strategy that suits your style. Some strategies are purely technical analysis based, some are news/release based. The type of strategy you follow does not matter as long as it is tested and proved.
Mental Preparation: to become a successful day trader you will need psychological preparation. While day trading, you should have clear and focused mind. You should have integrity and determination to stick to your strategy no matter what. Day trading should be considered just like a business and not like gambling.
Following things can affect your success in day trading, thus they should be avoided. You should avoid day trading:
• If you are busy
• If you are having a bad day in your personal life
• If you are sick
• If you are drunk/high
As forex is a 24-hour market, you will need to pin point the trading time depending on your convenience and volatility of the market.
European Traders: European traders have a good advantage as they can trade with Asian markets as well as US markets during their market hours. The volatility will be at its peak when two or more market timings are overlapping. For example in the morning session for European traders they can trade JPY, AUD and NZD pairs as these markets are open during this time. And later in the afternoon session European traders can trade European currencies with USD as the New York exchange has its morning session open during this time.
Asian Traders: Asian markets open first in the day, they can trade JPY, AUD and NZD with European currencies as the European markets are open during afternoon session of the Asian markets.
US Traders: US traders can trade during their morning session which overlaps with European afternoon session. Also the morning session is the time when most macroeconomic data is released, so the volatility is at its peak during this time.
These things are necessary for you to become a day trader. However these things do not guarantee success, what does? Is your determination to 'not give up'.