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Author Topic: What is Forex Day Trading?  (Read 86 times)

ThomasRlino

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on: December 28, 2023, 02:56:58 PM
What is Forex Day Trading?

The intraday method of starting a Forex day trade is a type of trading style where a position is held open for no more than 24 hours without being held overnight. This means there are no exchange costs. Any time frame can be used for analysis, but the most popular time frames are H1 and H4. Unlike scalping or other markets, trades are kept open for several hours - this allows you to assess the situation without emotions and haste and at the same time not to overdo it. You don't need a large deposit if you can avoid spikes in local volatility.

Daily strategies are the favorite type of trading style for beginner forex traders. Brokers have no problems with the Forex day trading strategy, which cannot be said for scalping. Price noise is partially smoothed out (no local chaotic bi-directional movements), wave patterns are noticeable. And most importantly, you don't need to make hasty decisions, but at the same time you don't need to wait long for the result.

Intraday currency trading is speculative, so the financial instruments are mostly currency pairs. SDRs on stocks and commodities are more suitable for long-term strategies, where the transaction is held in the foreign exchange market for 3-5 days. On the other hand, cryptocurrencies are an ideal instrument for intraday trading: scalping with them is not profitable due to the large margin, while long-term trading carries unjustified risks. And volatility of 3-5-10% per day bodes quite well for far-sighted traders in the forex market.

There are a few unspoken rules about day trading opportunities. The first relates to opening and closing trades over the weekend. Forex day traders are skipping the first two hours of the European trading session on Monday. After the weekend, the Forex market may open with a price gap: Forex day traders are just starting their analysis and outlining their weekly plans. The early hours of Monday are the least predictable time, but after that the financial market goes back to business as usual. The same goes for Friday. Before the weekend, in the last hours, trades are closed en masse to avoid swaps and fundamental risks.

The second rule is to consider the volatility of the instrument in a given session. With the H4 time frame, it is likely that the open trade overlaps with the second session, where forex trading volumes can be completely different. During the Asian session, attention should be paid to JPY, during the European session - to European currencies for trading.


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