Currency Day Trading – The Facts

When a trader buys and sells currencies within the same day it’s known as currency  daytrading. This means that all trades are done within the same day and nothing is held for over 24 hours by the investor. Anyone can do currency daytrading whereas previously this kind of forex activity was only available to large banks and financial institutions

Who Does Currency Day Trading?

This kind of daytrading is attractive to individual traders at home as forex uses leverage to allow a small investment to reap potentially very large rewards (while also running the risk of large losses as well). Professional day traders can work from home or they can work for larger institutions like investment banks, the difference being the amount of research and resources available to them.

Successful currency day trading means having usually invested a lot of your own time in concentrating on one or two specific currency pairs which you will eventually become an expert on. Making money in this kind of business is largely based upon experience as one must be able to time the correct entry and exit positions from the trade perfectly.

How Does One Day Trade?

Currency day trading is based upon a set of analytics that dictate when the trader will enter the market to buy or sell currency with a view to making a profit. A lot of research time and money goes into developing a currency day trading system which will spit out signals. These are based upon either the fundamentals method which uses up-to-date news from around the world or the technical analysis method which is based upon charts.

Is There A Guaranteed Method?

A recent phenomenon in the market has been the development of currency day trading systems which are completely on autopilot. This means someone has taken the time to teach software what signals to look for and when to trade based upon them. Many think that this is a successful method as the computer faces none of the human weaknesses such as the psychological needs to ride a profit or trying to trade out of a loss.

However there is unlikely to ever be a currency day trading system which consistently makes a lot of money and no losses as the owner of would be very unlikely to want to sell or share his system.

As with all trading you should make yourself aware of the risk factors involved with currency day trading. If you’re starting out you will incur losses which you will have to accept as part of the learning process and be prepared to accept the fact that there is no substitute for learning how to trade yourself and not relying entirely on any one system.