What is Forex day trading?
Day trading Forex for most people in practice is completely different from what is depicted on the Internet. This is not a system that allows you to get rich at lightning speed, as some advisors say. Immerse yourself in the world of intraday trading and see for yourself.
The guide to profitable day trading in Forex can be considered controversial because everyone has their own opinion on it. However, everyone agrees that this is a very risky business and you should make sure that you have a complete understanding of the market and a clear understanding of these risks.
Forex day trading and income generation
Even if you have recently begun to study the Forex market and have become a participant in it, you should be aware of such a concept as leverage. This option allows a trader to speculate with other people's money and receive large profits. Usually, the amount of leverage is quite large, which provides an important advantage.
Such traders never expect strong market surges – on the contrary, they want small, restrained moves. Because of the huge amounts they manage, the profits are pretty good, even with a tiny jump in the currency. Thus, throughout the day, the trader must accumulate as many pips as possible in order to end the day with a good profit.
Intraday Forex Trading and Trading Systems
Remember: Forex day trading strategies and systems are different concepts. The system chooses the direction for trading, and the strategy is, one might say, detailed instructions for making a deal. The strategy includes the readings of various indicators, time frames, trade open and close points. So let's take a look at the most used systems for Forex day trading.
- The essence of the scalping system is that by making transactions, you will receive a small income. This is due to the fact that as soon as the price rises by just a couple of points, the system automatically closes your trade by selling the currency. Thus, in order to get a considerable income, you need to operate with large amounts and constantly make as many transactions as possible.
- This system works in reverse order to the scalping system. For example, a couple of minutes ago the price increased by several points, after which the system will try to return it to its original level. The moment the price starts to fall again, traders enter, who use the attenuation system. That is, they will profit from market fluctuations at the moment when the system recovers the price.
- Trading from intraday levels or daily reversals. The goal of this model is the same as in the damping system: making a profit by trying to keep the price at the same level. You buy or sell a currency in the low period of the day and close your position in the high one. That is, asset price volatility will help you make a profit on every trade.
- In this type of Forex day trading system, trades are held after receiving any international news, or after a very large transaction. Complete your trade the moment volume decreases and a bearish candle appears. In other words, buy your asset a couple of hours before the news is released and sell it when the price for it has risen to a sufficient level.
The various Forex day trading systems use the same instruments as other types of trading. The only difference is what timeframes and approaches you use. Day trading involves gaining not in price on one trade, but in a large number of low-profit trades.