What is Day Trading in Forex

What is Day Trading in Forex

Day trading Forex is trading in the foreign exchange market, when the deal is opened and closed within one day. Another name for this strategy is day trading. This can be quite a profitable way of trading, if the precautions are followed. For newcomers, it can seem like a complicated process, as a detailed investment plan is required.

We’ve shed some light on day trading, looking at the pros and cons, types of debt trading, etc.

Fundamentals of Day Trading

The prevalence of day trading is increasing year by year, people are attracted to make a profit every day, the opportunity to work with high leverage. You can use this trading system in any market, but it is most commonly used in forex trading. In order to use day-trading it is necessary to study the market thoroughly, to be able to profit even from minor market fluctuations and try not to hold a position for a long time.

Usually trader chooses the most liquid positions of shares or currencies but in any case deal must be closed at the end of the day. Such trades are more suitable for forex, as it is only necessary to analyze the charts for one day.

Even though intraday trading does not seem to be difficult, it requires a great deal of preparation and knowledge of the market you are trading.

Types of Day Trading

What is Day Trading in Forex

There are several trading strategies for day trading, here are a few of them:

Trade on the trend

This strategy involves finding a market trend, this requires the study of the chart for a long period of time. When the general trend is clear – you can consider short-term charts.

Counter-trend trading

There are similarities with the previous strategy, for example it is also necessary to determine the general trend, in addition it is necessary to check whether there are trades in the opposite direction. Simply put, it is trading against the market, it is risky, but with the right approach it pays off.

Range Trading

When trading between points of minimum and maximum, it is necessary to first determine these values. That is, a corridor is formed within which the market moves. In other words, when the minimum point is reached, it is possible to open a position in growth, and when the point of maximum is reached, it is logical to open a deal on the fall of price.

Asset for the range trade should be volatile enough that the price had time to reach one of the minimum or maximum points during the day, while at the same time, the market should not be so active that the price fell out of the range and gave rise to a new trend.

Advantages and disadvantages of action trading on forex

What is Day Trading in Forex

Like any trading strategy, there are pros and cons. We recommend calculating all the advantages and disadvantages before you start this type of trading.

Advantages of Day Trading Forex.

Since the trader holds a position for a short period of time, the risk of market exposure will be much lower than that of long-term traders. When holding a position overnight, in addition to swaps, there are risks of order slippage.

Less drawdowns – it is logical that if the market is in the drawdown for a long time, it is a loss for the trader, here the probability is much less, the trader does not freeze his funds for weeks, to wait for the market reversal in his direction.

Quick result – the result of transaction is known the same day, it allows you to plan your trading budget every day.

A higher level of activity is a great solution for active traders, as the involvement in the trade is maximum.

Now let’s look at the disadvantages of intraday trading:

Increased costs – this is due to the fact that both entering and exiting a trade costs some money, since trades are intraday, there will be a lot of costs of this nature as well.

Speed of decision making – it doesn’t look complicated, but it increases the stress level.

If you trade all the time, you will need additional software for market watching and monitoring which can cost extra money.

High risks – you can not always predict where the market will go during the day, in general, this kind of trading is difficult to predict.

Is it possible to earn on day trading?

There is no definite answer, but trader must be ready for the loss because the market may become unstable in few hours.

Where to begin?

What is Day Trading in Forex

We recommend you to open a demo account to begin with. You will be able to test all of your strategies and estimate your strengths. Once you have decided on your strategy, open a real account and deposit money into it. Remember, once you have chosen your strategy, do not walk away, always stick to it. The market is tricky and one wrong move can bring you to zero balance. Take all emotions and excitement aside.

Analysis, analysis, and again – analysis. Analyze the market in the morning, analyze the results in the evening and revise the strategy if necessary. During the day do not change the strategy, even if you see negative deals.

What income can I count on when trading?

If you use the strategy of risk minimization, then with the odds of winning 55 percent, you can safely count on a monthly profit of 20 percent. In fact, the result is up to 15% of profit of the trader. A trader who feels quite confident inside the day.


In this material, we have tried to give you an objective picture of day trading, its pros and cons and strategies. To begin with, you need to test a few strategies to understand. Which one is comfortable for you. We did not set the goal to make a manual, following which you will surely earn. The article is only of an introductory nature.

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