Day trading is a popular means of making money in Forex. This is a speculative activity, involving a lot of risk and day traders take advantage of the fluctuations in the prices of foreign currencies within the day to make some profit. Day traders dealing with forex are also known as range traders. If you are interested to make a mark in the foreign exchange market as a day trader, you can use the following interesting tips to your advantage.
Tips to become a successful day trader
1) Have patience with the entries and exits
In order to make a nominal amount of profit as a day trader, you need to make both intraday exits and entries on a regular basis. Therefore, there has to be patience on your part to become successful. You need to do plenty of evaluation while making decisions for your trades. If you become impatient, then it will be difficult for you to understand the logic with which the market functions.
2) Remain cautious while following the movements
As a day trader, keep in mind that you have to make a number of entries and exits within the same day. The charts and graphs that are normally used are 15 and 30 minute charts and they are small time charts to evaluate the market conditions. Therefore, you have to be extremely cautious while reading the charts and searching for opportunities.
3) Look for complimentary trials
Complimentary or free trials are frequently offered by forex brokers to range traders and these are good for carrying out practices. After practicing, you will have a better idea about yourself as to how fit you are for foreign currency day trading business.
4) Don’t hope that you will win every time
Intraday trading might appear to be simple at the initial stage since you can make gains within the same day. However, you should know that the chance of loss is fairly high as well. Making huge profits in day trading is not a cakewalk and you must be ready to experience losses in some of your transactions.
5) Have a day trading plan in place
Having a trading plan prior to participating in real-time transactions (buying and selling) is important. This strategy consists of entries, exits and positions. This plan works as a guide and clarifies many of the investors’ confusions.
6) Taking too many positions is risky
There is a belief that taking too many positions is more profitable than taking a limited number of positions. However, this does not stand true all the time. Working with two or three positions simultaneously turns out to be more effective since they are simpler to manage. Working with multiple positions often becomes unmanageable and the outcome is, undoubtedly, a loss.
7) Greed is absolutely a ‘no-no’
Working without a plan may result in unprecedented losses in the market. If there is no prospect in the market, it is better to quit with the taken for granted gain. You also have to decipher the exit points during trading activities. Being greedy will not bring you profits; rather, it may result in losses.
8) Avoid the market when there is so much confusion
Continuing your trading activities when there is too much uncertainty in the market is risky. While experiencing losses, making decisions logically is absolutely essential. If you go on trading in spite of these uncertainties, the extent of loss would be higher.
Keep in mind that forex trading is subject to a lot of risk and it may not be right for everyone. Take into account factors like fluctuations, your investment goals, degree of experience, yield, risk, pattern, techniques and time period. Clarify all your doubts with the help of a forex/financial consultant and make the most of the finance tools and widgets you are familiar with.