Forex day trading is the buying and selling of financial instruments within the same trading day. Day traders use day trading strategies and close their position at the end of the trading day.
Forex day trading is typically used to avoid Forex swap which is a commission or rollover interest brokers charge to their clients when they extend their positions overnight. Day traders also play an important role in the Forex market as they fuel the market with liquidity.
If you intend to be a day trader, you should consider the following:
Market Knowledge
Day trading requires an in-depth knowledge of the market. This means you need to be able to assess and determine what moves the market. Not only you should focus on the fundamentals, but also on the technicals.
Adequate Capital
Day trading just like other types of trading is risky. You should have adequate capital that you are willing to risk to start day trading. Meaning, it’s the money that you specifically allocate for Forex trading. Furthermore, you should always practice managing your risk. A common rule is that traders should only risk 1% of their capital per trade.
Discipline
Day trading requires discipline. Without it, you are likely to make poor trading decisions that will result in huge losses. Discipline also provides you emotional stability. Thus, whenever the market throws something unexpected at you, you are able to respond quickly and smartly.
Bottomline
Kickstart your day trading journey by following the above-mentioned tips. You should have deep knowledge of the market, extra funds that you are willing to risk, and enough amount of discipline to get started. Furthermore, it’s not a matter of how experienced or new you are in the field of day trading. It’s about your eagerness to commit in order to succeed at it.