Truth About Day Trading

Day Trading – Truth About Day Trading

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Day Trading

Day Trading the currency market is a type of trading where positions are opened and closed in the same day. A forex trader who participates in this type of trading is called a day trader. Day traders can buy and sell many times during the day.

Apart form currencies, shares, futures, index, and commodities can be day traded as well. Day trading can be extremely profitable as well as being extremely unprofitable. Why? Because Forex being a highly leveraged  instrument, there is potential for huge profits as well as huge loses in day trading.

Day trading used to be the exclusive domain of professional investors and speculators and big financial firms but thanks to the online day trading through the internet, anybody can now day trade while sitting at home or on a holiday or vacation.

Day Trading Advantages:

  • Entering and exiting positions within the same day
  • Day Trading allows you to make Quicker Profits-You make money faster
  • The effect of compounding your wins can increase your account very fast because of the multiple trades you take per day
  • Active Market Participation
  • Smaller Profits for each trade
  • Multiple traders-can take unlimited number of trades in a day.

Day Trading Disadvantages:

  • Highly leveraged nature of forex means your risk is amplified  in day trading
  • Spread will affect your overall profit-you make the forex broker rich by trading too much
  • Poor discipline can result in you losing a lot of money in a very short amount of time.
  • Not managing your risk properly can result in you losing a lot of money in a short amount of time.
  • No sufficient risk capital-you don’t want to be stressed out “trying to survive” on a small capital.
  • Day Trading is Time consuming if you have a full time job.
  • It is stressful because of its fast paced nature.
  • You need to be using a very highly profitable forex  trading strategy which has good risk: reward ratio
  • Because your trading outlook is only for the day, it can be harder to predict the market as you are not focused on the long term outlook of where the market will head.

 Secret to Successful Day Trading?

There is really no secret, only these few simple things you do consistently and you can become a very successful forex day trader:

  • Find or have a profitable day trading forex trading strategy that has a very good risk : reward ratio.
  • Be consistent in your discipline in following your forex trading strategy
  • Be disciplined in your risk management

There are forex traders who make a living day trading and there secret to success is nothing more than just following the 3 things above.

Do you have what it takes to be a successful day trader? Which trading style fits you? Do you know? You see, the type of trading system you use, whether it be scalping, swing trading, position trading or day trading depends a lot on your own personality and preference. Only you know what you’d prefer and you would make that choice accordingly.

Do you have what it takes to be successful in day trading?

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