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Forex day trading
Written by: PaxForex analytics dept - Monday, 11 August 2014 0 comments
Forex day trading is one of the most popular forex trading strategies and it is employed by both beginners and experienced traders. As a day trader you will not hold any trading positions overnight. You may make multiple trades within a single day but you will liquidate all of your trading positions before the market closes. If you decide to use a day trading strategy remember that the longer you hold a trading position the higher your risk of losing on the trade.
Usually a day trader’s strategy uses significantly more investment capital than some of the other strategies because the fluctuations are magnified with larger amounts of money. Since forex relies on leverage it is relatively easy to make large trades without having a lot of capital on hand. The drawback to this system is that you can easily lose money that you cannot afford to repay if leverage works against you during a particular trading day.
Using technical analysis in day trading strategies is about finding indicators that speak to you and make sense as you look at the charts. Sometimes it's one indicator that helps you see what you want and sometimes it's about a combination of indicators that helps you find a signal. There is no particular indicator that will
tell you exactly how to trade. The methods are developed around the indicator rather than the indicator just telling you what you should do.
Another method often used to do forex day trading is fundamental trading.Fundamental trading based on economic data. You would take the economic data of one country and compare it against another one in order to trade based on which economy is strengthening. This method seems like one that would be difficult to day trade, but it is used by many big banks and funds. When you use this method you should take a look for a report related to the currency pair that you like to trade and make a plan.
There are people that do like to be tied to a screen all day and make money while trying to make intraday trades. Day trading is typically technical trading which is based on technical indicators and occasionally some news. It requires some reasonable amount of skill which usually has to be learned through experience; if you are just beginning to trade forex day trading probably isn't for you unless you start very small with your lot sizes.