Being a Day Trader

Forex Trading Nigeria

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Posted by on Monday October 1, 2012 10:51:41:

There are many kinds of forex traders when it comes to how they schedule their trading activities. You can be a day, weekly or monthly trader. More active traders tend to be day traders however as they trade every day when the market is open and close their positions before the market closes for the day.

In order to be a successful day trader, you would need to set your daily target and know when to call it a day. You just have to be disciplined and stick to your rules whether you are on the winning or losing side.

Is it really ok to hold positions for more than a day, most especially when you don't know how the rest of the 24 hr market would trade. Day traders tend to trade when the banks trade and close before they close. They don't want to allow open positions to unpredictable circumstances.

Day traders tend to:
- Set their daily target
- Cut their daily losses
- Stick to a trading pattern
- Don't hold positions for more than a day.

So think of a scenario like this, if you want to make $20 a day profit from forex trading, you may trade with a $1000 capital but risk only about $10 to $20 and then set a target of about 50 pips if trading a currency pair like the EURUSD. If you get 50 pips, then you would win the $20 profit and if you lose 50 pips, you may also lose the $20. You can also decide to break your trades into 40 pips targets for 2 positions and if you win twice you get $10 each profit. So it really depends on your plan.
As a day trader however, you have it at the back of your mind that in order to maintain your capital, you just need to risk about $20 a day and you can then decide on how many trades to play in order to win or lose a maximum of $20 when accumulated. You may decide on a single daily trade of about 50 pips worth $20 or multiple trades of 40 pips each worth about $5 and for the latter you just need to make 4 trades.

To be a day trader, you just need to trade for that day after understanding which direction the market is heading to. Is it bullish or bearish is the question to ask before you being your day trading. Understand the market reports during those busy trading hours and then know where to put your stick.

Forex trading is not gambling because in the latter you just leave it to luck while in professional forex trading, you trade based on market conditions and expectations which are mostly accurately predictable.