Day Trading-Should I Apply This Strategy In My Forex Trading?
Marco Thompson
profits from this highly lucrative investment opportunity. But without
any exception, everyone could be terribly loosing also. Trading forex
is alike as a journey to find a hidden treasure. One thing thats
important to be carefully considered by forex traders, especially the
new one is to choose which trading strategy is the most suitable for
them to be applied in their trading system. We can presuppose trading
strategy as a map to find the treasure. For they who are new to forex
trading, without a direction, they will mostly end up with nothing in
their hands but lost and regrets.
Traders may define their trading strategy in many ways. The basic
trading strategy are mainly divided into four main trading time frame;
short term trading (day trading), swing trading, long term trading
(long term trading), and buy & hold investment. The first strategy
mentioned are the quickest, and last are the most long time frame
which could be reach years count.
Most forex traders, especially they who are already 'expert' in forex
choose to trade with a short term trading strategy. Lots of new
traders are willing to follow their system and expecting to be as
successful as their successor. The problems are, many newbie don't
even know what's day trading is, what things should to be considered
before using it and how to do it right. In this article, i'll try to
clearly explain 'what must traders know' about this strategy so that
at least there are questions answered...
Short term trading (Day Trading)
Short term trading or commonly known as day trading strategy is a
trading (buying and selling) of forex / currencies which be done
intraday. As forex market is opened 24 hours (by using brokers
services which allowing traders to do so), we can assume that day
trading is a trading which be done in less than 24 hours. They who use
this strategy are called as a day trader. Day traders are tend to do
trading with frequency throughout a day. They may trade twice, or
maybe tens of times in a single day.
Day trading gives traders more control among the trade as it need no
overnight hold exposure. Day traders are usually monitoring the market
changes carefully and quickly reacting whenever something that
according to his system is profitable or potentially loss so that they
can focus on a higher winning percentages of trades. In exchange for
its benefits, the disadvantages of using day trading strategy are
concerning with the traders effort to be active in their trade and
maybe the cost of brokers commission -- if they are charging you by
the frequency-based of commission.
Day Trading Risk
I'll not gonna tell you that this strategy is riskier than other
strategy or safer. It is not the trading strategy which determine the
risk level of your trading. At my older article (Forex Trading:
Historical Currency Price Chart - Why is it Important to Me?), I said
that long term trading is better and safer than the short one. But as
I said so in that article that the greatest teacher in to teach how do
we suppose to treat our forex trading is our own experience.
Basically, there are no trading strategy which safer nor riskier than
other. It's our trading behavior which make our trading -- regardless
what trading system we used -- become safe or not. I'm judging that
short term are riskier than long term is just because my experience
said so.
Considering with your frequency of trading, yes, of course its riskier
than other strategy which have a longer trading time frame. But, don't
you realize that by doing your trading more often, it means you're
increasing your chance to profiting as well? I guess we call it for
even than...
Things to Consider Before Trading with Day Trading Strategy
If you're planning to be a successful forex trader, the most thing to
be done is to develop your trading strategy, and stick with it. A
successful forex traders are basically achieve their position by
consistence, discipline, and a solid of self, risk, and money
management. You can't just always changing your strategy along your
way. A new strategy will gonna change your whole developed system.
That's mean that you have to start over again from your very first
step. It's a huge loss for every traders...
Before you're gonna applying day trading strategy as your trading
strategy, you should make a clear and careful consideration about some
of important aspects in this strategy:
1. YourSelf - Personality, Aims and Basic Knowledge
There is no guarantee that you'll gonna be a successful trader. Forex
markets, as other investment are filled by probability - 50% of
winning and 50% of loosing. But thats don't means that you'll gonna
win after loosing or loosing after winning. There are a possibility
that sometimes you'll taste how great it is to always win your trade
in your whole day. But there are also a possibility that you might
slapped by a long strings of losses as well.Trading in day trading
time frame means you're gonna trades a lots. Everyone would gonna be
happy for winning, but 'Can you accept a strings of loosing and still
be consistence with your system?','Can you handle your emotion and
still be calm and clearly minded for next trade after that?'. If your
answer to that kind of question is 'yes', you may proceed to the next
step then.
Every traders are trading with a different goal in their mind. It
might for fun, to get an additional income or for living. If you're
trading just for fun, there's nothing to consider then as whatever
you're winning or loosing, you've got what's you're looking for.But if
you're manage to treat your trading profits as an income, at least you
should have a solid money management to manage your trade and your
life. Don't ever get burned by your emotion or greed which push you to
place a trade with the money that you can't afford of loosing it.
Know your enemy. You've to at least know how forex market is, and what
components which are behind their volatile market. Educate yourself
with a basic knowledge of trading analysis and learn about how to use
them so you won't blind while watching the market changes. Reading
some books about them or taking some course are a considerable choice
to have yourself properly educated and have more adjusted forex minded
2. The Brokers
Day trading Strategy must be supported with an adequate data and
resources. Brokers choice can be one of the critical step in your day
trading. Here a few checklist to find out whether that particular
brokers are eligible for your trading strategy or not:
Do they are a trusted broker? Find out some informations about them
more detailed to be sure (who is/are the regulator? find out where
their track report history? ask in a forum about them, etc)
Do they support you with a real market data and a good rate of update?
How fast is their system executing your trade query?
How tight is their spread
How much their commission?
3. Your Preparation
In order to do your day trading smoothly your trading environment must
be supported with an capable hardware -- and maybe some software to.
Your basic needs is:
Tough Computer - as she'll used for kind a long time
Large and clear monitor - so it won't hurt your eyes badly
Fast of internet connection - for data streaming and order placing
UPS for your power supply backup - you won't let electricity cuts your
profiting chances, don't you?
Well, I guess now you've more information about day trading strategy
than before you read this article. I hope this little writing would be
useful for you and your forex trading future. If you're looking for
more information about online forex trading, please feel free to visit
my blog at http://forexocta.blogspot.com
Happy trading,
Octa
Forex Godfather Next Generation Expert Advisor Orders HITS On All
Winning Trade - http://www.fxgfather.tk/