In stock and forex trading, there are lots of strategies you can use to make a profit in the foreign exchange market.
One of them is to choose a day trading strategy, aka open and close trading positions on the same day when you open a trading position.
The simple explanation is that you open a trading position on Monday in the morning, then to close the position you will do it on Monday too, maybe at night after the Take-profit was hit or you made a cut-loss.
So, what exactly is day trading and how can beginners do it?
Day trading in forex is the step of buying and selling stocks or forex on the same trading day.
This means that positions opened on that day are not transferred to the next trading session or the next day.
By making this short transaction, traders will get a profit, although it is small but if done regularly it will be quite tempting.
For those of you who are still beginners and want to try to master day trading, there are several strategies that you should know. Find out more in the discussion below!
Prepare Yourself with Sufficient Knowledge
Day trading is usually done by super disciplined traders, who already have experience and have a good understanding of market fundamentals.
That's why many professionals advise novice traders not to do it, why? because most beginners are undisciplined and lazy to learn.
But if you're interested, it's a good idea to equip yourself with some basic knowledge.
The basic knowledge includes procedures, trading tools, complete information about the pairs you will trade and study market conditions. Also know the things that can affect the price.
Also read: All About Scalping Strategy You Should Know
Take advantage of the Long Term Trend
One way that many day traders use is to check the long-term trend that occurs on the short-term time-frame.
Usually the long term trend in the case of day trading, which is on the 1 to 4 hour time frame, here you will find it easier to see the trend that is happening.
After getting an idea of where the trend is moving, then they enter the market to open positions.
The time frame that is generally used to open a position is 5 to 15 minutes.
Why use this time-frame? to get an accurate price when opening a position, it is much more profitable and reduces losses.
"Trend viewing strategy" or "Trend-seeking strategy", this is also known as trend trading strategy.
Use Counter Trend Trading
Please note that not all day traders use long term trends to determine their daily trading steps.
There are also traders who choose to open positions in the opposite direction.
This is done so that they can enter early if the trend changes or trend reversal during a correction and don't forget to use stop-losses, just in case Take-profit is not touched and the trend returns to the long-term trend.
Like the long term trend, you can also use time frames with a duration of 5 to 15 minutes with this strategy.
Pay Attention to Margins
Margin trading is trading assets through funds obtained from securities companies as third parties.
When using margin trading, you trade with money that doesn't actually belong to you.
That is, there are several risks that you must be prepared to bear.
Although it can help in the trading process, margin trading is not recommended for inexperienced traders.
The reason is that there is a possibility that you use it wrong and the result can be a big loss and you will cry over your bad luck.
Determine When to Exit and Entry the foreign exchange market
Accurate entry and exit times can determine the level of success of your day trading.
Therefore, plan carefully when to enter and at what price level you will exit.
In this way, you can avoid trading mistakes.
If you see market conditions that tend to be less profitable, it's a good idea to exit immediately to minimize losses.
Limit the Capital You Use
For beginners, you should not go all out when day trading.
Start your trading with stocks or foreign currencies that are small in value.
For stocks, you can choose a maximum of two stocks.
With a small capital, you can learn to track and look for profit opportunities more easily.
Using a lot of stocks or foreign currencies when you don't understand market conditions will make it difficult for you to exit at the right time.
Avoid Trading During Rush Hours
For professional traders, the busy stock market conditions in the morning may be normal.
They tend to already recognize the pattern so they can profit from it.
On the other hand, novice traders should avoid peak hours like this.
It's a good idea to observe the market for the first 20 minutes before entering.
Those are some day trading strategies that beginners can do. Interested in trying? Learn from now.
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