Forex Day Trading

You may be asking yourself what Forex day trading is and how to use it for profit making. First, Forex stands for the Foreign Exchange and involves the official international reserves. Forex assets are property of the central banks and are denominated in US dollars, the Euro, the GB pound, the Japanese yen, and other currencies.

Day trading refers to taking part in a trade on the exchange for a period that ranges from a few minutes to a few hours. At the end of the trading day, all of your trades are closed. Day traders have to manage their trades themselves, which means that you have to be in front of your computer. The overnight situation on the market is not an issue for day traders. They need to only be concerned about the next day of trade.

Day trading is a great activity for extraverts because it involves a lot of action. As a day trader, you also need to have a lot of time on your hands. If you are working full-time and have two children, find yourself another ‘hobby’. Day traders have to act and make decisions in a quick manner, devoting a good part of their time. In the usual case, a day of trade is marked both by profits and losses. Naturally, a good trader aims at more profits than losses. You can make profit from the fluctuations of foreign currency exchange rates. What you need is a long attention span for this, and you must be capable of careful observation. Having more losing trades is not a problem. However, you should manage to cut them off early while letting your profitable trades run.

An important issue pertaining to day trade is the indicators and time frames. The best frame is about 15 minutes during which you are looking at trends. After having a look at this chart, you need to look at the 5 minute chart for trend directions to enter and exit trade.

How do people get into day trading in the first place? In fact, the main traders are big institutions. Individuals who conduct speculative trade form a small subset in this type of trading. Big institutions have entire departments of traders, most of whom are economists who specialize in macro-level trends. In general, trading from home is rather difficult because macro-trends are hard to grasp, and it is hard to win by chance.

Statistics show that around 90 percent of the traders lose their deposits. A select few get good returns on their investments. The rest manage to just break even. If you do decide to get into Forex day trading, it is important to not get too stressed over it. There are people who literally get up at daybreak to catch up on exchange rates, and they still end up losing. Keep in mind that a lot of the success is based on inside information. So, if you are not one of those guys, do not bother. By the way, insider rules apply everywhere except to Forex trading; so, inside tips are not illegal.