What Are The Best Strategies For Day Trading?
Day trading refers to a trading technique that consists of opening a position and then closing it shortly thereafter. A "day trader" (a trader who practices "day trading") can thus pass dozens of orders per day, seeking to make maximum profits on small movements of pips, before the market closes at the end of the day.
Unlike long-term traders who trade long positions, i.e. open over several days, the day traders leave them open only for a few hours or even minutes. Under no circumstances, they will keep them open overnight.
The most common method of "day trading" is called "scalping". It consists of speculating on small changes in very short-term prices, with the aim of maximizing profits while minimizing risks.
"Day trading" is undoubtedly an advantageous technique in different ways. Starting with the high number of potential opportunities. Price movements do not vary much, between opening and closing the position, but it is the repetition that makes a day trader more likely to make winning trades out of the number. In addition, it avoids all the risks associated with so-called "overnight" trading, i.e. when leaving an open position after the market closes. Indeed, the positions opened by a day trader do not remain so long enough to be influenced by market trends, economic news or any other factor that generally influences currency prices.
In conclusion, this type of technique is not for all forex traders, but is better suited to active personalities, who are able to find opportunities at a glance. When properly implemented, it can be very lucrative.
But beware, there are not only advantages to using this technique. Like all others, it has a number of drawbacks, which are important to consider. For example, since a day trader makes more trades than a traditional forex trader, he will also pay more spreads (the difference between the purchase and sale price you pay your forex broker). If your broker practices variable spreads, the transaction can quickly turn to your disadvantage.
Another drawback is the nervousness and fatigue generated by the use of this technique. The day trader must be constantly on the lookout, to spot interesting trading opportunities. Moreover, the incessant opening and closing can quickly become dizzying for the uninitiated. That is why it's important to take proper forex training.