Introduction to day trading

The term "day trading" means trading within one day. This term became so popular that today, everyone involved in day trading, whether it is a trader or an employee in a brokerage company, is called a day trader.

Those who prefer dynamic trading and open one position after another have become fervent devotees of the trade that is performed within one day. An opportunity to avoid a rollover commission, which is charged by a broker for extending a position overnight, is one more advantage of the strategy.

Nowadays, a lot of traders choose day trading. Although it is quite a challenging approach, it has gained the approval of both novice and experienced traders.

The key reason for such popularity is an opportunity to receive profit in a short period of time, investing insignificant sums of money.

To turn day trading into a lucrative money-making tool, it is necessary to perform an accurate analysis of the currency pair movement. It is not as easy as it may seem. There are a lot of external factors that influence the speed and direction of the price.

Traders should constantly monitor the market situation, analyze and compare reasons for the price pressure as well as predict a further movement of the trading instrument. Under such conditions, day trading will become a successful and profitable strategy.

Traders should also develop a skill of fast reaction to events. This will allow them to perfectly determine the moment to enter or leave the market. Try to be patient and you will receive a significant profit, avoiding grave risks.

Let us take a look at the main strategies of day trading.

  • Scalping involves short-term trades and an opportunity to lock in gains as fast as possible. As a rule, profit reaches just several percentage points. Following this strategy within one day, you may receive income thanks to a big turnover.
  • News trading. Those who choose this approach should keep abreast of the market situation 24/7. The strategy implies monitoring a news flow as well as comparison and analysis of currencies’ behavior in various situations. To become successful, traders have to obtain particular skills and experience. News trading will mostly suit those traders who have deep knowledge in fundamental analysis.
  • Pullback trading. In this case, traders should open positions against the main trend, when the market activity becomes tepid.

Novice traders should know that it is not a good idea to open positions in the first 20 minutes after the beginning of a trading session. The fact is that during this period, traders try to lock in gains of yesterday’s positions and they are usually in panic. As a result, currencies’ movements are changeable and unpredictable. It is the right signal to avoid entering the market.

Summing up, we can say that intraday trading could become a perfect source of income. However, to make such income stable and reliable, traders should learn how to apply the mixed strategy, which contains the most efficient tools

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