One of the most popular ways to trade on the forex market is day currency trading. Day currency trading is a short-term type of trading that offers certain characteristics. There are a lot of traders who use day trading as their primary type of trading. Within day currency trading there are a number of different strategies that you can use. Of course, before you dive into day currency trading, you need to consider whether or not this is right for you.
What Are the Characteristics of Day Currency Trading?
There are a number of characteristic that separate forex day trading from other types of trading:
- The use of leverage is another characteristic of the day trader. Each trade these traders complete only makes a small number of pips. In order to increase their profits day traders often use leverage to their advantage.
- Short-term trades are the most defining characteristic of the day trader. Traders using this style will not have trades that last longer than a day. In many of the strategies used by these traders the positions are only open for a matter of minutes. There are other strategies that require the position to be open for a few hours.
- Being disciplined is another characteristic. As these traders use leverage often and work with short-term trades they have to be disciplined in their trading. Allowing a trade to turn into a loss and severely impact their account and it can throw out their goals for the day.
- Decent capital amounts are the last characteristic of the day trader. The leverage being used and the small pip profits require decent amount of capital. It is not possible to be very successful in day trading by having a small capital amount.
The Tools You Need
All forex traders need certain tools which help them trade. There are specific tools that you have to have if you are going to day trade:
- Technical analysis tools. Most day traders rely primarily on technical analysis to monitor the market. Having technical tools which are stable, reliable and offer all the information you need is very important.
- A reliable trading platform is the first tool you need. This might seem obvious and something all traders’ need, but the short-term trading of these traders makes it very important. If the platform is not reliable you could miss a profitable trade all together.
- Live news feed is something new day traders often overlook. Even though technical analysis is primarily used having live news feed allows you to catch any breaking news that could affect the market.
Trading Personalities for Day Trading
While day trading is popular it is not the best option for everyone. The short-term nature of the trades increases the pressure on the trader. This means that people who get nervous easily could creak under the pressure. Day traders also have to be able to adapt to the market very easily. As the market constantly changes you have to be able to adapt not only your mental state but the way you trade as well.