In a term of global forex trading, everyone could benefits a huge of profits from this highly lucrative investment opportunity. But without any exception, everyone could be terribly losing also. Trading forex is alike as a journey to find a hidden treasure. One thing thats important to be carefully considered by forex traders, especially the new one is to choose which trading strategy is the most suitable for them to be applied in their trading system. We can presuppose trading strategy as a map to find the treasure. For they who are new to forex trading, without a direction, they will mostly end up with nothing in their hands but lost and regrets.
Traders may define their trading strategy in many ways. The basic trading strategy are mainly divided into four main trading time frame; short term trading (day trading), swing trading, long term trading (long term trading), and buy & hold investment. The first strategy mentioned are the quickest, and last are the most long time frame which could be reach years count.
Most forex traders, especially they who are already ‘expert’ in forex choose to trade with a short term trading strategy. Lots of new traders are willing to follow their system and expecting to be as successful as their successor. The problems are, many newbie don’t even know what’s day trading is, what things should to be considered before using it and how to do it right. In this article, i’ll try to clearly explain ‘what must traders know’ about this strategy so that at least there are questions answered…
Short term trading (Day Trading)
Short term trading or commonly known as day trading strategy is a trading (buying and selling) of forex / currencies which be done intraday. As forex market is opened 24 hours (by using brokers services which allowing traders to do so), we can assume that day trading is a trading which be done in less than 24 hours. They who use this strategy are called as a day trader. Day traders are tend to do trading with frequency throughout a day. They may trade twice, or maybe tens of times in a single day.
Day trading gives traders more control among the trade as it need no overnight hold exposure. Day traders are usually monitoring the market changes carefully and quickly reacting whenever something that according to his system is profitable or potentially loss so that they can focus on a higher winning percentages of trades. In exchange for its benefits, the disadvantages of using day trading strategy are concerning with the traders effort to be active in their trade and maybe the cost of brokers commission — if they are charging you by the frequency-based of commission.
Day Trading Risk
I’ll not gonna tell you that this strategy is riskier than other strategy or safer. It is not the trading strategy which determine the risk level of your trading. At my older article (Forex Trading: Historical Currency Price Chart – Why is it Important to Me?), I said that long term trading is better and safer than the short one. But as I said so in that article that the greatest teacher in to teach how do we suppose to treat our forex trading is our own experience. Basically, there are no trading strategy which safer nor riskier than other. It’s our trading behavior which make our trading — regardless what trading system we used — become safe or not. I’m judging that short term are riskier than long term is just because my experience said so.
Considering with your frequency of trading, yes, of course its riskier than other strategy which have a longer trading time frame. But, don’t you realize that by doing your trading more often, it means you’re increasing your chance to profiting as well? I guess we call it for even than…
Things to Consider Before Trading with Day Trading Strategy
If you’re planning to be a successful forex trader, the most thing to be done is to develop your trading strategy, and stick with it. A successful forex traders are basically achieve their position by consistence, discipline, and a solid of self, risk, and money management. You can’t just always changing your strategy along your way. A new strategy will gonna change your whole developed system. That’s mean that you have to start over again from your very first step. It’s a huge loss for every traders…
Before you’re gonna applying day trading strategy as your trading strategy, you should make a clear and careful consideration about some of important aspects in this strategy:
1. YourSelf – Personality, Aims and Basic Knowledge
2. The Brokers
Day trading Strategy must be supported with an adequate data and resources. Brokers choice can be one of the critical step in your day trading. Here a few checklist to find out whether that particular brokers are eligible for your trading strategy or not:
3. Your Preparation
In order to do your day trading smoothly your trading environment must be supported with an capable hardware — and maybe some software to. Your basic needs is:
Well, I guess now you’ve more information about day trading strategy than before you read this article. I hope this little writing would be useful for you and your top trades to learn forex trading future.