The Basics of Forex Day Trading
Forex day trading is one of the ways that many traders use the forex market. As the name suggests, day trading is any forex trading that lasts only one day. The traders who use this method will not have any trades last longer than a few hours. At the end of their day they will have no open trades. There are two methods used in day trading that you should be aware of.
Day Trading With Fundamental Analysis
The first method used in forex day trading is fundamental analysis. This form of analysis will look at economic data and news to see what the market will be doing. When using this method you should not only look at the data of one country but of both the countries in your currency pair. It is only through the comparison of the data that you will be able to accurately state what the market may do.
Many people believe that this method is not actually suited to day trading because it often deals with longer trade terms. If you are using forex calendar you will be able to tell what economic data may affect the market within the next day. This method is usually connected to forex news trading but you have to be sure that the trade you are completing are based on what the market is doing and not what you think it will do.
This is the main problem that day traders have with fundamental analysis. It is possible to get a vague idea of what the market will do through news but you can never know for sure. This means that you cannot truly plan your trade until the market turns. Depending on where you are and the currency pair the swing may happen while you are not trading.
Forex Day Trading With Technical Analysis
Forex day trading and technical analysis go very well together. The problem is that many new traders use technical analysis incorrectly. New traders often look for a system that uses technical analysis in a certain way for every trade possible. This is not something that actually works and you will end up losing more money than you can make.
When you use technical analysis with forex day trading you need to look for indicators which speak to you and make sense to you. The indicators need to be easy to identify on charts as well. With this type of analysis you should be looking for a few indicators which will tell you when to trade and what to trade.
You may be overwhelmed by the number of indictors on the forex market. When you are looking at forming a technical analysis strategy you should try as many of the indicators as possible. It is only through the trial and error of these indicators that you will be able to find the indicators that work for you and that work together. It should be noted that indicators are not what actually tell you what to trade. It is the methods you create around the indicators that tell you what to trade.
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