Forex day trading is, as the term suggests, holding trades in the currency market on an intra-day basis, whether by scalping or taking intra-day swing trades. Trade setups are usually based on the smaller timeframes (1min-1hr charts), and typically, will only be in a trade for a few minutes or hours, with the intention of being flat (all trades closed) by the end of the day. Day trading is preferred by individuals who like to be actively entering and exiting trades
As is the case with both swing trading and position trading as well, a trader needs to have a trading strategy that has proven to be profitable and that the trader is comfortable executing. His plan must include risk management rules to adhere to if he is to achieve consistent success.
Listed below are some advantages and disadvantages of forex day trading:
Day trading can be time-consuming. The trader usually has to monitor his trades closely, and be on hand to close trades during news announcements, for instance.
Since trading is based on intra-day timeframes, the trader needs to be quick to react to price swings and changes without taking too much time to consider. Some can find it taxing to maintain such intense concentration, and making timely decisions with a sense of confidence can require a lot of time spent honing the skill. This can definitely result in burnout over time.
Day trading fosters over-trading, by virtue of the many trading opportunities that set up on any given day. It is easy to find yourself over-trading if you don’t set strict rules/guidelines and profit targets to adhere to.
Since retail forex traders have to pay a spread each time they enter a trade, forex day trading can be an expensive venture, especially if you have a broker that does not offer competitive spreads.
We are all creatures that respond to reinforcement. It is, in this case, a feel-good factor that is instrumental in building self-confidence while trading. I am referring to the fact that day traders, unlike position/swing traders, do not have to wait for extended periods of time to take profit on winning positions, and, assuming that the trading strategy works, it follows that being able to close multiple winning trades on a daily basis is invaluable to a trader’s confidence in his performance.
When testing a new strategy, it goes without saying, that the amount of data one uses in the evaluation, as well as the different market conditions in which the strategy has been tested is important in forming reliable conclusions. Day trading offers an advantage over position/swing trading because of the potential for quick feedback on strategies being tested by virtue of the frequency with which the trade setups can occur.
Although day traders target smaller numbers of pips, they can take advantage of ranging as well as trending markets. Additionally, counter-trend scalping can offer good potential for profits during volatile price movements.
Forex day trading is not suitable for everyone, and not everyone will like it, as personality type is also an important factor. It is critically important that any strategy being used is thoroughly tested before-hand to determine its profitability, potential for draw-down, etc. as is the case regardless of the type of trader you are. Day trading can be exciting as well as profitable, but the responsibility is on each individual trader to protect his equity and state of mind.
Here at Winners Edge Trading we have a successful day trading system that we use to make a huge amount of profit on a daily basis. To learn about this trading system simply this link: https://info.winnersedgetrading.com/day-trading-WinnersEdgeTrading
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