Day Trade Forex – Everything You Need to Know

day trade forex

Day trade Forex or day trading is a trade that begins and ends during one day.

Trader will pick new assets daily betting on short-term market fluctuations. This strategy is best suited for traders who have enough time for monitoring changes. No matter what, day trader will not leave assets on an account when the day is over. Instead they accept daily loss or profit.

What is day trade Forex?

Here are some of the things you have to know about Forex day traders. They:

  • Usually don’t like long-term trades
  • Minimize the risk by micromanaging each position
  • Read and learn about financial markets each and every day, especially before opening hours
  • Prefer to work in a dynamic environment and have enough time for day trading on Forex
  • Their strategies rely heavily on fresh news

Here are some types of daily Forex trading:

Trend trading

Here is the best example of daily trading.

Given that daily trading, such as day trade Forex, requires a hands-on approach and constant switches between currencies each day, trader doesn’t have enough free time to run a proper analysis. So his system will rely heavily on trends. Person who is successful will have better understanding of trends than his peers.

You start by researching full currency trend. After that, you need to focus on a smaller time frame and find potential within fluctuations.

Based on these micro fluctuations you can establish optimal price and time to invest your money.

Finding these trends can help you allocate capital properly.

Countertrend trading

This is a bit riskier variant of trend trading.

Basically, you are buying assets when price is high and betting on the fact that it will fall well below value that you paid. In other words, you are trying to find the end of a trend and begging of a new one. Here, you need to properly establish the slope and predict lowest (or highest) points. If you did it right, you will get a better sense what the lowest (or highest) price should be.

Please have in mind that this strategy can be quite risky and you might end losing a lot of money. But even if you might lose money, profit potential is extremely high.

Breakout trading

When trading currencies on Forex, price of a currency will usually be within a certain range. You can predict its common lowest and common highest price.

During breakout trading, you are buying and selling assets at their highest and lowest points and waiting for breakouts.

In other words, you are expecting to catch values that are well above or below common ones.

Even if you don’t manage to catch a breakout you can expect that the price of an asset will return to previous point allowing you to buy it or sell it for the same price you previously invested. However, if you do manage to catch a breakout, you will be able to make some great money.

If you’re not running a business or don’t have a full-time job but have investment background, day trade Forex might be just the right thing for you.

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