Introduction to forex day trading for beginners

What is Forex day trading? 

Day trading is one of the popular strategies practiced by many traders in the foreign exchange market. Here an investor can purchase and sell currency pairs throughout a single trading day. The intention behind this is to harvest profit from small price fluctuation. 

Traders in Forex day trading prefer to select a currency pair at the beginning of the trading day and continue trading the same till the end of the trading day with either loss or profit. They do not like to hold the pairs overnight. Hence, protecting their trade from the overnight price swings. 

Forex day traders 

This trading style only suits those Forex traders who have enormous time throughout the day to monitor, analyze and execute a trade. However, Forex day trading might be a perfect choice if you consider swing trading a slight slow or scalping trading quite fast. 

An investor might be a Forex day investor in case: 

  • He likes starting and closing a trade on currency pairs within a single day.
  • He has enough time to scrutinize the foreign exchange market at the start of the trading day and can monitor its trade throughout the day.
  • He is quite curious about the loss or wins on a particular trade at the end of the trading day.

An investor might not be a Forex day investor in case: 

  • He likes short-term or long-term trading. 
  • He is too busy with things and does not have time to scrutinize and monitor its trade throughout the trading day. 
  • He has a day job. 

Numerous things to take into account if you decide to day trade Forex 

Before starting your day trading journey in the foreign exchange market, look at the several factors listed below. Start trading when you are sure about these points. 

Stay updated on the trending and latest news or financial events to aid you in selecting the right direction.

It is essential to stay updated with the latest economic news so that you can build firm trading decisions at the start of the trading day. 

Be sure that you have enough time to monitor the trade 

If you work under a company in the private sector or work in any full-time job, think about managing the time between day trading and work. Do not take the risk on your job by monitoring the charts and movements the whole day. 

Types of Forex day trading 

Forex day trading does not lie in just one strategy. Experienced traders generally use multiple-day trading strategies. Some of the popular techniques are listed below: 

Trend Trading 

Trend trading refers to analyzing the overall charts and graphs of a trade. They consider a longer interval for determining these trends. Once this long-term analysis is completed, the trader moves to small trading intervals and charts and finds the trading opportunities in the direction of a particular trend. These indicators on time frame graphs help traders determine the entry points and related time. 

Countertrend Trading 

This day trading strategy is the same as trend day trading. The only difference between the two is once the trader has estimated the overall trend in the former, he looks for trade in the reverse direction. The elementary idea of this strategy lies in determining the end of a movement and responding early in case the trend reverses. It seems to be risky but can generate a massive profit. 

Range Trading 

It is sometimes known as channel trading. It is a type of day trading strategy which begins with an in-depth knowledge of current price movements. The trader can use charts and graphs to determine the market lows and highs during the trading day at the same time, closely monitoring the difference between points. 

Breakout Trading

Breakout trading is when the trader monitors the pair and checks the range it has attained during certain trading day hours. After this, he aims at placing trades on either side with the hope of overcoming breakout in both directions. 

This method is usually effective when the pair is in a tight range because it indicates that the currency pair is about to take a big step in terms of price. In such a situation, the ultimate goal of the trader is to set himself for this big move and catch it when it happens.

In breakout trading, the trader determines a range where resistance and support have been holding firmly. Once it is done, he can set the entry points below and above the breakout levels. An investor needs to target a similar amount of pips that make up the determined range. 

Bottom Line 

Hopefully, the idea of Forex day trading, its conditions, and the different strategies involved with it is clear now. You can start trading Forex right away by selecting the right broker to get a trading account.

PrimeFin is a trusted brokerage firm offering various tradable assets, including currency pairs, cryptocurrency, stocks, etc. The total available currency pairs with the broker are 47, with a minimum deposit of $250. 

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