Forex Day Trading
Day trading involves buying and selling of securities on a single day
with the intention of making profit between the buying price and selling price of the securities. Day trading specifically entails trading of securities within the same trading day. Day trading differs from other forms of trading in that the positions held within a day are not held past that given trading day.
Day trading usually involves two types of trading styles, short term trading style also known as scalping and long term trading also known as momentum trading. Short term day trading is a style that involves buying and selling of large volumes of securities within seconds or minutes, with the aim of making a small percentage profit in each of the securities traded and at the same time cutting the chances of a loss to a minimum. Momentum trading on the other hand entails observing the patterns of the trading market and buying securities at low prices with the aim of selling them at higher prices at a later time of the same day. Some traders may use both trading styles while others opt for a single style and stick to it.
A day trader can decide to trade directly by using various forms of Forex exchange of which requires them to have a trading account with each of them thus it's much easier for one to use an online Forex trading broker. As a day trader you should have adequate information and knowledge about Forex trading to ensure you don't lose large sums of money. A Forex day trader should have sufficient capital before going into Forex trading, by that i mean, you should have risk capital, that is, capital you are willing to lose without you going into a financial crisis. Forex day trading involves huge risks which can lead to profits or loses. A Forex day trader should also have a specific trading strategy, as a day trader, you should learn both trading styles and pick one which suits you best if not both.
An example of how Forex day trading works can consist of transactions involving currency pairs whereby a currency pair like a US dollar and a Euro, usually standardized in a EUR/USD format, can change their exchange rates at certain times of the day. An exchange rate of EUR/USD = 1.401, meaning every Euro will cost $1.4 at 9.00pm, can change in the exchange rate to EUR/USD = 1.411 at 11.00pm, thus meaning if the day trader had bought the currency at the former price and happens to sell at the latter price, they stand a chance to make a certain percentage of profit according to the amount of currencies purchased at the time. The Forex exchange of the Euro against the Dollar is usually of very small amounts, say, of 1/100 of a cent. Other currency pairs have different exchange rates.
As a starting Forex day trader i would advice you to gather more information on how Forex day trading works from websites like 'Babypips' which will give you a hand to hand guide on how to go about Forex day trading. Another Information website you need to visit before starting your Forex day trading from home should be 'Investopedia' , Investopedia will inform you on what you need to know before starting day trading at Forex trade and also strategies on which to use to avoid incurring huge loses in your trading business. Investopedia, also offers a free Forex simulator to help you fully grasp how Forex day trading works.
