If you're sick of reading about stock market news, and you're tired of dealing with endless shares in your financial portfolio, then you might decide that it's time to invest in something new as part of your day trading strategy. One particularly popular option for people who are interested in continuing their day trading skills, but tired of stocks, is to try forex day trading.
Day Trading in Forex
If you’re wondering what is day trading in Forex, it is the process of buying and selling financial securities or currencies, within a period of 24 hours. While it's possible to day trade in virtually any market, most people either day trade in the stock market for its versatility, or the forex market for its simplicity. Here, we're going to take a look at the basics of forex day trading.
How Does Forex Day Trading Work?
Forex day trading follows a similar strategy to any other kind of day trading. A day trader leverages the capital available to them to purchase a specific amount of a currency. When that currency starts to change its value in a favorable direction, the day trader looks for someone to purchase their currency from them, so that they can take advantage of the change in prices. There are certain forex currency pairs that are more common to trade in than others, such as the USD and the Euro.
Forex trading works best in currencies with a large trading volume. As certain pairs have more favorable trading conditions, it's worth doing your research to find out which currency prices fluctuate the most, and where you can stand to make the biggest profits. For the most part, day traders make sure that they have bought and sold all of their forex currencies within the same 24-hour period, because this eliminates the need to pay for fees when they keep a position overnight.
When you maintain a Forex position overnight, you need to pay fees called Swaps which can eat into the amount of money that you make over an extended period of time. Day traders also enjoy the rush that comes with trading in a rapid environment.
Day Trading in Forex for Beginners
Becoming a Forex day trader doesn't have to be as difficult as it seems. Often, all you need to do to get started is conduct plenty of research into your chosen currency pair. You can even practice day trading with Forex by using a virtual simulator or paper trading account. Many experts use day trading simulators to improve their skills with everything from stocks and futures to Forex trading.
If you're nervous about trading in Forex for the first time on the day trading market, one way to simplify the process is to access the support of a day trading broker. There are many specialist forex brokers on the market today that can help you to choose which forex transactions you should make in a day. Although it's much easier to work with a broker than to trade on your own, you will need to pay extra fees to your brokerage account for the additional help.
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