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Day trading can be defined as sitting in front of a trading screen for quite some time and making trades that should be closed by the time the trader closes the computer and is done for the session.
In addition to that, a day trader could be scalping – meaning entering fast trades with tiny profit targets of under 10 pips or so – or they could be swing trading – the ones trying to catch a daily move for as high as 200 pips or so. Both could become day trading if the trades opened and closed within a single session.
The Pros and Cons
Obviously, there are possible advantages and disadvantages in choosing to be a day trader.
The major advantage of day trading over the long-term is the same for most people. Day traders typically close their trades at the end of their day trading session, switch off, and skip the market until the next session.
A lot of people become attached to the peace of mind it offers, especially over weekends when forex markets are closed. However, a few brokers are now offering weekend forex trading, not to mention cryptocurrencies that trade over the weekend too. Day traders can enjoy the advantage of not paying overnight swap fees if they do not leave any positions open at 5 p.m. New York time, when swaps are typically paid or charged.
Most importantly, a successful day trader can generate more money than they would by using a longer-term trading style.
Meanwhile, its major disadvantage is that it is very difficult. And for less-experienced traders, it tends to be less profitable compared to the longer-term trading style.
The Challenge
Day trading can be quite challenging – technically, and emotionally. Many things must go right to make money that it becomes very easy to lose consistently. Also, many traders trying to trade like this are not successful. But that does not mean no one can. Traders just need to be skilled, organized, and emotionally stable to have a good chance of winning.
Then, new traders are not recommended to begin trading in a day trading style. Day trading is popular because of how exciting it is, there’s a lot of action, and it is easy to determine all the intraday price movement and believe this can be converted into lots of profit. Though a skilled trader could do this, it is nowhere near as easy as it looks.
And that’s why new traders better start with position and swing trading – a much easier way to extract money from the market. Also, here, they can build up their skills in the meantime. After developing enough competence, they can later move into day trading if they want.
People who day trade forex must become organized and systematic as to how they go about it.
Conclusion
Successful day trading is all about focusing on the big picture and being flexible. After that, people must spot opportunities where for the risk of, say 10 pips or less, there is an opportunity to win around 30 o 40 pips at least. Seeing the turn at the low or high in the day early in a major session for a forex pair can be an excellent way to achieve this, entering in front of a low-risk small turn candle, along with the stop loss on the side of it.
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