Day Trading

Day Trading-Forex Trading

Forex trading is a high reward business but know that it also has high risks. You need to hone your skills to make a profit on a regular basis. Day trading the foreign currencies market isn’t for the faint of heart, or should I say pocketbook, so keep this in mind as you’re learning to trade this market.

Forex trading as a day trader is the same concept as day trading in the securities markets. They both make a short term bet on the price movements of different currencies in the portfolio. So you gain or lose depending on the intra day movements in prices of the foreign currencies. You have a long or short position intra day depending on where you think the price will be later on during the day. Here’s an example trade. Say you’re long the Euro in the morning session of trading; this means you’ve bought Euro at a price. Therefore you expect Euro to rise further in the day so you’ll be able to sell it at the higher price and make a profit in the process. This would be a bullish trade.

Day trading means just that day trading, having a very short term view of the market. Forex trading is a very volatile market and is fraught with the risk of huge capital losses.

It would be advisable to have a long term outlook especially in the highly volatile foreign currency market. Have knowledge of the economy, performance on inflation front, policies of central banks of the country whose currencies you intend to trade and then take an informed decision, without worrying about short term movements. Many traders have lost heavily while betting on day trading foreign currency. There’s no fool proof strategy which can shield you from losses if you place your trade over hours instead of weeks, months or years.

If you really think you want to try day trading, take smaller bets, this will give you a feel for the market. Keep your stakes on a limited scale and close out as soon as you get a chance. Remember to place a stop loss position if you want to avoid carnage and scalp out at an opportune time. This is a high risk proposition and there are better ways to make money than day trading in the Forex market.

When you hear the hype of so called success stories of Forex trading as a day trader, remember that Rome wasn’t built in a day. It takes time to build your fortune. Never allow your greed to overcome your good reason.