Checklist before Starting Day Trading Forex
Forex Day Trading Explained
Day trading forex is often used as a tool to avoid the fees for keeping a position for a longer period of time. These fees are also known as Swaps which is some cases are positive. The strategy of acquiring assets with positive Swaps is known as Carry Trade. Forex day trading is one of the most speculative activity but ensures the smooth functioning of the market. The liquidity in the market is provided by the forex day traders.
Things You Need to Know
Before start trading, there are a few essential things about forex day trading that you need to know in order to avoid huge losses.
Learn the Skills
Forex day trading is not a rocket science and the basics can be learned easily. The fact that you can win it with a simple system the foundation of which is based on trading charts and it follows the price action. New day traders just need to get their system straight so that they can get the right mindset in order to gain profits which is the only benchmark of success.
Maintain a Positive Mindset
Forex day trading is not an emotional person’s cup of tea. Most traders end up on the losing side because they are not able to control their emotions and lose a lot of money. For this reason, a positive mindset is crucial. The key is to cut the losses quickly. The market is always reaping profits so, even if you sustain some small losses, you can quickly recover it.
Forex Trading is a Different Ball Game
Forex trading is a completely different league and it is difficult to master. However, those who have the correct mindset complemented with a simple but logical trading system, this business has nothing but good news for you.
No Robots & No Shortcuts
Most of the new traders simply try to take the help of robots and try to beat the market but end up getting beat. There are no shortcuts in the forex day trading market and those who have this sort of a mindset, always fall big time at some part of their journey.
How to Trade in Forex Day Trading Market?
In this market, the currencies are traded in pairs. It is essential to have two currencies being exchanged for all the transactions. The reason to do is to show which currency is relative to the other. If you are wondering how day trading is done, it is not how it is shown in the media. There is a general conception that it is the simplest formula to get rich in days. However, the reality is otherwise. When you enter the market, you start seeing how it actually functions. The only way to survive the market is to get as much knowledge as possible and get a clear understanding of the risks involved.
In order to represent the currencies, symbols are used and every country has its own unique symbol which is used in trading. The reason to assign symbols is that each country’s currency has its own value against the other. Each pair in the Forex market comes with its own market price which acts as an indicator of how much of one currency is needed to exchange against another.
Using some simple calculations, you can ascertain the currency rate. Please note that the market price of currencies keeps fluctuating because the transactions keep on happening around the globe every single moment. The price of the currencies is determined in pips. A pip is the 4th decimal place found in a currency pair and the pairs moving a lot in the market can move 50 to 100 pips. The reason for using pips is for the convenience of the traders that helps them understand how much they made during day trading and how much they lost.