Day trading is simply the name given to any type of forex trade which is executed on any one given day of the week, on which the expiry time of that trade is on the very same day. Whilst it is possible to place a forex trade to expire in several days, weeks or even months many traders prefer to only have live trades open which are going to expire on the same day, to allow them to hopefully make a profit over the short term.
Forex trading, much like any form of market speculation will always come with an element of risk. Being able to manage that risk effectively will be the difference between success and failure. One of the biggest advantages of end of day trading is the way in which it allows traders to carry out their trading activity around a demanding day job or other various time consuming life commitments.
Day trading is suited for forex traders that have enough time throughout the day to analyze, execute and monitor a trade. If you think scalping is too fast but swing trading is a bit slow for your taste, then day trading might be for you. Day trading has the primary advantage that at the end of the day, the trader goes home with no positions and no overnight market risk. Another advantage of day trading is that the trader tends to be alert and can more easily focus on and take advantage of intra-day market movements.
Because of the nature of financial leverage and the rapid returns that are possible, day trading results can range from extremely profitable to extremely unprofitable, and high-risk profile traders can generate either huge percentage returns or huge percentage losses. Moreover, since the big moves in foreign exchange generally happen when the forex market trends over weeks or even months, day trading strategies may not give you the same sort of returns as successful trend-following trading systems.
If you think you might like to try your hand at day trading, the first thing you will need to do is come up with a successful day trading system. You can start this process by reviewing literature and online resources for information that can help you develop an objective trading plan. The main idea behind having an objective trading plan involves minimizing any emotional interference that might sabotage your forex trading. Also remember to keep your trading system relatively simple and easy to follow so that you can do so quickly and with confidence.