The FOREX market is easier to predict using technical analysis than other markets. The value of a stock can fluctuate greatly due to nonfundamental factors such as hype or a rumor of a merger.

This is a lot less true for currencies. They are therefore easier to predict. It is not practical to buy and sell actual currencies when trading on the currency market. Physical money bills are impossible to transfer efficiently. It is easy to transfer digital money kept in currency accounts but you will need to be able to trade substantial sums of money to be able to make a decent profit as a day trader.

A better option is to trade different financial instruments that are based on currency pairs. Their value is determined by the underlying currency pair and it is possible to trade leveraged instruments that allows you to make a decent profit without having to invest a lot of money. Leveraged FOREX instruments can have very large leverage which allows you to make or lose a lot of money on very small fluctuations in the market value of the underlying currency pairs. Some leveraged instruments offer leverage of x If the currency pair increase in value by 0.

Leveraged trades are sometimes referred to as margin trades. CFD, Contract for Difference, is a good way to day trade in the FOREX market. CFD:s are designed for day trading and make it very easy to assume leveraged short term positions on the currency market.

There are a large number of different CFD brokers on the market and you can find one that provides the opportunities that you are looking for. You can read more about CFD:s here. They are called binary options because they offer a binary outcome. You either earn a large predefined profit or you lose your entire investment. Binary options are sold by brokers who also act as underwriters. They profit when you lose money and the options are designed to cost you money. You need to be a skilled trader to make money trading these options since they always favour the broker.

Binary options are banned within the EU but are still legal on many other markets. Click the link to see where binary options are legal. I do not recommend binary options trading. It is too hard to make money. A large percentage of all traders lose money. You can read more about binary options here. Learn to daytrade Welcome to Daytrading Forex We train successful traders Find a Broker FOREX bonus. Day trading Forex Welcome to daytradingforex. Your email address will not be published.

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We are not responsible for your investing results. Finixio Ltd, Tower 42, 25 Old Broad Street, London EC2N 1HN [email protected]. Skip to primary navigation Skip to main content Skip to primary sidebar Skip to footer How to Day Trade the Forex Market.

Why Day Trade Forex? Simple Day Trading Strategies Two of the simplest and most popular day trading strategies involve using trends and breakouts.

Day Trading Trends When day trading trends you are looking to trade a trend in a very similar way that you would on a higher time frame. You are first looking to identify the obvious trend. Day Trading Breakouts Day trading breakouts is an extremely popular strategy to day trade. Lastly Day trading is not for everyone. About Johnathon Fox Johnathon is a Forex and Futures trader with over ten years trading experience who also acts as a mentor and coach to thousands and has written for some of the biggest finance and trading sites in the world.

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The following guide assumes a basic understanding of how the forex market operates. If you are new to forex, check out Introduction to trade Forex , which provides some background on trading currencies. Most of my day trades in the forex market are based on these simple concepts. For simplicity, assume I am talking about an uptrend unless otherwise noted. The same concepts apply to downtrends. Price is constantly moving, so we need to be able to plan our trades before and as they are forming.

Before a trade is taken we also need to know what we will do once we are in the trade, depending on what the market does next. Most people gravitate toward one or the other. They think about entering a trade and the price flying in their direction for an easy profit and high-fives from friends. This is fantasy. Or they enter a trade and imagine the price plummeting against them, stopping them out. This is fear. Either of these scenarios are possible, but so are a host of other possibilities, and which one is more prevalent in your mind will bias your trading.

Rather, we want to consider all possibilities: the price could drop, rally, or do nothing. If you are very optimistic, you may miss clues that the market is turning against you. If you are very pessimistic you may avoid a good trade, or jump out of it too early. What is missing? Your strategy gets you into a trade, with an initial profit target and stop loss.

Once you are in the trade though, it is a different world. All sorts of things could happen. What if the price moves in your favor slightly and then starts to move against you? What if the price moves to within 0. What if the price does absolutely nothing after you get in…for 10 minutes?

As a day trader you need to consider the various things could happen, and what you will do in each circumstance. Actually, there are only a few things that could happen. The price can rise, fall, or move sideways, and it may do it quickly or slowly.

The combination of the price moving higher-quickly tells us something different than higher-slowly. A quick downward movement followed by a slow upward movement tells us something different than slow-down and quick-up. Have a plan for each combination that could arise. It is a fair bit to think about…but you have a lot of time while trading. Placing an order takes almost no time or effort. Hitting buttons is easy. The real effort is the thinking and analysis that occurs before the trade.

Once the trade is placed, you should already know what you will do in any situation. Develop your thinking and analysis skills so you can do this on the fly. Trading beyond the hard right edge is an advanced form of active trade management. It is a mind frame, where you look at what has happened and come up with scenarios for exactly what you will do exit, adjust stop loss or target, or change nothing in various scenarios after you enter a trade.

As discussed above, there are only a few things need to consider—direction, size of moves, and speed of moves.

To day trade the forex market successfully you need to read and adjust to market conditions. You decide which direction you are going to trade, and before the trade you decide how to manage that trade. You adapt to what happens after you are in the trade. Like Napoleon on the battlefield, you have calculated everything beforehand. Here is the April 14 EURUSD 1-minute chart, along with comments below. I traded for about an hour and a half. This day two hour period was dominated by news at AM EST on chart.

The brown boxes mark consolidations in the price which is what we are watching for. I used a 10 pip stop loss and 18 pip profit target on this particular day. In less than two hours of trading we had 5 trades: 3 winners and 2 losers, for a total of With a 10 pip stop loss you can trade 2 mini lots to stay within this risk tolerance.

Therefore, your daily profit is Once consistent, you can increase risk to 1. Here is the April 15 EURUSD 1-minute chart I learned a new trick in MT4—if you drag an order from your account history onto the chart it will put the trade levels for that trade on your chart.

On April 15 we had a Euro conference begin right around the time I started trading on chart and that created some price whipsaws. Best to avoid…but as we can see I did take one trade in there…. Overall, in less than an hour of trading we had 3 trades: 2 winners and 1 losers, for a total of With an 8 pip stop loss you can trade 2. Here is a chart from July By a little more than an hour after the US opens though we have seen a strong move down, indicating the start of a downtrend.

During the first two hours of that downtrend I have drawn three potential trades. These were picked because there was a pullback and a consolidation. There were other pullbacks with no consolidations, and other consolidations with no pullbacks. The three trades highlighted had both. Waves had been moving about pips prior to our trades, so a 10 pip target is realistic, along with a 5 to 6 pips stop loss.

No problem on any of the trades this day; take home 30 pips, multiplied by however many lots you are trading. Days like the above are fairly easy.

When there is a trend, we continue to trade it until there is evidence of a reversal. At that point, we wait for another signal. But not everyday has a beautiful trend. The next charts shows the day prior. The London and US overlap session was a snooze, as traders awaited the Fed Interest Rate Announcement later in the day Tip: if there is a big announcement later in the day, the morning is often fairly quiet as major institutions await the news.

One thing to always note is the y-axis. On the chart above the price moves about 90 pips. On this day, the price moved about I recommend that you always set your y-axis to about 80 or 90 pips may change a bit over time , as this will keep movements in perspective from day to day. Once the US session gets going, the price drops, but then bounces above where the decline began.

No short. We then get no consolidations which would offer us a long trade. The price then drops below prior swing lows, negating any long trades. By this point…about we can see that average wave is only about 4 pips. Also, notice how a trend never really gets going. If you sit there all day, you are going to be tempted to trade. Instead, if you sit there for an hour and the market is absolutely dead, go do something else for a few hours, and then tell yourself you can come later and see if there are any opportunities in the US session especially if a news announcement is coming out , or just wait until the next day.

If you trade during the London session, and it is dead, stop after an hour and come back and check your charts once the US session begins. Not finding a good trading opportunity sucks, especially when you sit there all morning.

But you know what sucks even more? Below is another trading day example. This time, a nice strong trend is in play. On this chart, I have added in a few comments about deeper pullbacks. When you have a very strong trend with long trending waves, like in the chart below, it is reasonable to assume that some pullbacks will be more complex or deeper than others. Those deeper pullbacks are often forecast by the price moving above recent minor swing highs downtrend, or dropping below minor swing lows in an uptrend and the occasional weaker wave in the trending direction.

These are pieces of evidence that tell us to be a bit more cautious and maybe wait for the next consolidation before trading assuming overall trend remains intact.

For that to happen, the price needs to fail to follow through in the trending direction, like it eventually does at the far right of the chart. I recommend using a daily stop loss and a loss from top. Read Day Traders: How and Why to Use a Daily Stop Loss for more details. Once you master this method, this should be a rare event.

On the flip side swing traders can often be holding trades for days or weeks. There are two potential ways to play this breakout. How to Get Started. This means that losing trades that have been leveraged can not result in you owing the broker any money. By day trading forex, you will be speculating on the short-term price shifts of currency pairs throughout the day. For example, Vantage FX offers spreads of 0 pips on major forex pairs when trading via its ECN account. Our own trading expectations are often imposed on the market, yet we cannot expect it to act according to our desires.

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