In just a matter of a few years, the Forex Trading business has flourished a great deal across the globe. Once considered to be just a financial experts realm, Forex trading is now being adopted by many a users as their primary means of income. And why not, for it has plenty of flavor (and benefits) to offer to its clients. Forex trading, in its most basic form, can be classified into three main categories: day trading, swing trading and position trading. Now, in order to step into the Forex trading business, one needs to know the difference between all three said modes of trading. In what is to follow, we shall be discussing exactly what does each of the various types of Forex trading means:
Day trading is all about participating in the trade activities for a matter of a few minutes to a maximum of a few hours in an entire day of trading. In this mode of trading, all business activities involving you are closed by the end of the day.
On the other hand, swing trading involves trading activities that may span from a few hours in the business to a few weeks, or may be two, after which the all the activities come to an end.
Lastly, position trading is based on putting on a trade, and continuing with it for a small matter of a few months to even years.
All aforementioned Forex trading types require you to be a master of a certain set of skills. As far as this particular article is concerned, we shall only keep our focus closely based on the Forex day trading.
Forex day trading demands a user to be in front of their computers in order to manage all the trades. There can be several chances for a day trader to make the most out of a complete day of trading without getting too much involved into the market trends and analyses overnight. This is primarily due to the hyper-volatile nature of the market that makes it tough for anyone to ascertain the situation of the following few minutes, let alone hours or even days. The only think required by a Forex day trader is to worry about the market situation only when the trades open on a particular day.
A Forex day trader’s day is usually packed with plenty of action where he is required to take instantaneous decisions, and has to get in and get out pretty quickly. In doing so, a Forex day traders gets plenty of opportunities to make huge profits and equal chances of losses in short bursts. However, at the end of the day, the main target for such traders is to make more profits than losses. There could be instances where a day trader may experience more losing trades than winning trades, however they can still make amends owing to the fact that they allow their winning trends to flow, and diminish their losing trades of early in the peace.
This also points towards another main strategy that needs to be employed by a Forex day trader. They must, for the most part, have a trading strategy as well as a system. In addition, a Forex day trader must also have a set of good indicators that may help them make quick and accurate decisions. Talking of trends and indicators, not all of them can be cited as ideal for day trading. There is little in looking at, say, the 1-hour time frame for day trading. Instead, a five and/or one minute chart should suffice quite nicely. Most day traders usually find one minute charts too fast to be deemed as feasible. They would rather prefer benefiting from gauging the market situation from a 15-minute chart, and then gaze at the 5 minute chart to enter or leave the trade. When day trading, most traders usually tend to take their trades in the direction on the trend of the 15 minute chart.
As quite obvious from the above, day trading might not suit the taste and preference of each and every single Forex trader, and only once you have appropriate and prior knowledge about it, should you decide whether you wish to jump on to the bandwagon of Forex day trading or not. Yes, if you have plenty of time at your disposal, and like to play the frenzy game of Forex day trading, then it might not be a tough decision for you to make. If you can understand the pros, cons and mode of this particular type of trade, it could earn you good profits.