When a trader enters and exits a trade on the same day before closing time, that’s called day trading. This can and is done with stocks, forex, futures contracts and options. There’s a lot of difference between this intraday system and the traditional one, and there are strategies and tools that can be applied to maximize earnings.
The important thing to remember here is that price variations are relatively minute due to the limited time period. This means that in order to pile up sizeable earnings, traders necessarily need to place large amounts on each trade. It also means that it is important to find trades that are liquid and volatile.
There are a few strategies that are commonly used, such as scalping, fading, daily pivots and momentum. Scalping is setting the price target to the first instance of profitability, while fading involves going short on an instrument that has shown rapid upwards movement. This is based on an assumption that the sudden upward surge is likely to reverse before closing.
Those who make use of the temporary surge caused by news reports to time their entry and exits are using Momentum. A trader who buys at the day’s lowest price and sells at the highest is using daily pivots. This requires the trader to get in and out at the precise price point(s) where trends reverse.
For executing such strategies, a trader will need a range of tools, charts and screens. The ones that are necessary include an internet (broadband) connection, and real-time market data and news report subscriptions. Candlestick charts can be used to do price-action analysis.
It’s also essential for those traders to understand and use stop losses. Knowing when to walk away with a loss for the day can save traders from taking risks in an attempt to recoup. Day trading isn’t for everyone, but it is interesting.
Currency news trading materials are extremely important for traders. Plus add a little bit of forex broker review feedings to your mind a! s a trad er.
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