Forex day trading is a trading strategy in which you close out all trades before the markets close and you do not hold any open positions overnight.
I’ve seen that many people are under the impression that this is an easy path to riches- you trade through the day, close out all trades at the end of the day and count your profits.
Unfortunately, it is not so easy. When you engage in day trading, there are a few mistakes you should avoid so that you do not wipe out all of the profits you’ve made earlier.
Some news announcements are expected and from earlier experience you know that the news is going to trigger off a movement in the market so you take a position even before the news announcement is made. The problem is, the market does not always react in a predictable manner simply because there may be other factors that are also playing an influencing role.
If you take a pre-position and the market moves the other way, you could end up losing a whole lot of money instantly. It is tempting because it sounds like easy money but I wouldn’t advise it as you could actually face larger losses than usual.
When you are holding a losing position it is natural to want to hold on to it in the hope that it will eventually improve. The problem with this is that you are losing time and money with this strategy. You have to close your trades by the end of the day.
What if the position does not improve? You will be forced to sell at a lower price anyway. Instead of waiting for the end of the day, it is better to cut your losses earlier and invest your time and money in a trade with more profit potential. My advice- don’t do it.
As a general rule, in forex trading, it is always advisable not to risk more than 1% of your capital on any single trade. With day trading this takes on even more importance. When planning your day trading strategies, one of the points you should include is your daily maximum risk on single trade. This should be something that you are comfortable with. As I said earlier, this is typically 1% or less of your capital.
You will hear a lot of gossip about traders who have made millions working the forex market. umm… this may or may not be true but don’t peg your dreams by those standards. You do not know how they started off or what is their financial background to start with.
Having unrealistic expectations can lead to a lot of frustration and can cause you to take unnecessary risks taking you even further away from your profits. The best way to stay grounded is to formulate a solid day trading strategy and stick by it no matter what.
Making steady profits with forex day trading requires discipline and persistence. If you are looking for a few tips and tricks in this stream of forex day trading, send me a message I’d be happy to share what I know with you.