The right way to trade on a daily basis

 Day trading can be a full-time or two-part business where you can take short-term trades that last less than a day. While some traders find success, the statistics say that only 10% of traders make a profit. It is important to know that while it is not easy to trade successfully and you certainly will not get rich quick, it is possible to make money from trading . Below we will take a comprehensive look at whether day trading is right for you.



One of the mistakes that new traders make is their belief that it's easy! It appears that you might sit in front of a computer screen and do some trades at your leisure, and that's all! You will make a lot of extra income. Demo accounts

While not a rule, it will help in the long run. Open a practice account with a good amount of money, but it should be reasonable and close to what you will be trading with. It's not as exciting as real trading, but you can make mistakes that you can learn from before trading with real money .

Market opening and entry into circulation

The first 15 minutes after the market opens is not the ideal time to make any intraday trading. You have to wait for the numbers to stabilize. Some of the activity is based on market bids placed overnight, or people who traded terribly for one reason or another. Wait, sit, watch, and wait. Watch the opening, know the opening times of the currency exchanges , and watch for a good opportunity to enter the market.

Before you trade, you need to have a solid trading exit plan in place. Watch the entire price but also set an exit price as well as an exit price. This will enable you to exit quickly if the trade begins to fall quickly. By setting a stop price, you can minimize losses in this scenario.

Maintaining a record of every trade you make is an important step in success. You can use the demo account for trial and error, but when you are trading with real money, you need to carefully monitor what happens with the trading. As soon as the trade was successful or losing, write it down. At the end of the day, review your trades and notes and you will know where to adjust in your trading pattern to increase your profitable trades.

Is trading on a daily basis the right path to success?

To become a successful day trader, you need to invest time in learning skills, research and planning. Day trading cannot be used as a get-rich-quick program. While some people may be lucky, the majority will not. This means that you should spend the time researching everything there is to know about trading . Then you should start the analysis. Analyze your personality, do historical analysis and graph analysis. Spend some time writing your goals and developing your trading strategy that fits into those goals. Then you will need time to practice and a lot of practice. In practice, you need to develop your strategy. To become a successful trader, it takes between 2 to 5 years. If you do not have the time to devote to that commitment, then day trading may not be suitable for you.

  • capital

The goal of trading is to make money, but in order to make money, you need money to get started. This money is known as equity and you cannot trade without sufficient capital. The amount of capital needed depends on the market you choose to trade in. Forex trading is possible with a capital of $ 100 (depending on the amount of the deposit in the company) only, and a leverage of 50: 1 is available. However, use of leverage closer to 5: 1 with higher equity is recommended.

  • Expected income

This is a difficult area to delve into, as income varies greatly between people and depends on many factors. It will depend on your capital and how long you will spend trading. The best way to get an idea of ​​how much you can make from day trading is to open a demo account and actually trade . The demo account enables you to trade real trades without spending real money. If you do this for a long time, such as 6 months to a year, you will have a clear picture of how much money you can make and whether day trading is right for you.

Day trading can be an ideal source of income that supports your lifestyle without having to spend all the time on it. Successful day traders are able to equip automated trading systems to work on their behalf so that they can make money elsewhere! This is a multitasking best practice! Sounds easy, but is it? Many people are suitable for day trading because it does not require a financial or business certification. Day trading is so specific that even if you have a financial background, this does not mean that you will be a normal day trader. So, here is how you can get started regardless of who you are, what your background is, where you live or what your work experience is.

Start by learning and preparing a trading strategy

Even if you have a college degree, learning day trading strategies is where anyone can get started. There are different trading strategies and styles that you can study, until you find the one that works best for you. Study each one and get successful trades to learn from. With Forex Trading, there are not many techniques that can be hidden. It's transparent, so you can learn by observing. Monitor what the market is doing and what good traders are doing in each situation. It takes time, but aren't you in this business for the long haul? Learn what strategies will keep your trades in check, regardless of market volatility or the mood you are in.

The worst way to trade Forex or any other market is to trade intuitively or based on internal feelings. Do not allow your mood to influence the trades you make. Study the market, follow the charts and determine a trading style. Don't allow emotions or someone else's advice to cause you to derail your plan. Stay tuned and follow the trades you have made and you will be able to adjust your plan along the way.

After you have chosen the trading style and strategy, the next difficult thing is to stick to that plan. Depending on your personality, this could be the easiest or most difficult thing in the world. If you are a patient person, you may be able to advance a lot in day trading. Patient traders know when to sit and wait. As with photographers, who sit in the background and wait for the perfect scene before shooting. Believe it or not, not everyone can wait. Many traders take trades that do not fit their plans, due to a lack of patience. Disciplined traders stick to the plan, even when they experience swing losses. Not every failure requires you to rebuild strategy. I look at the long term for a strategy adjustment.

Every day Forex trader manages their risks. This is one of the most important, if not important, elements of ensuring continued profitability.

For starters, you want to keep your risk in every trade very small, and 1% or less than that is ideal. This means that if you have an account worth $ 3000, you should not lose more than $ 30 in a single trade (see Position Sizing for Forex). This may seem small, but losses are accumulating, and even a good day trading strategy will see a series of losses. Risk is managed through stop loss orders, which we will discuss in the scenario sections below.

Psychological errors in the deliberative environment

Trading psychology is very important when it comes to a successful trader and unfortunately, this is an area of ​​trading strategy that is often overlooked. The majority of traders focus exclusively on their systems and while this is important to trading, it is not one area that needs to be understood and professionalized. Understanding the psychological barriers that affect your personal trading is just as important as sticking to your trading regime. Here, we will take a look at some of the most common psychological mistakes in the trading environment.

It is impossible to say that emotions should not go into circulation. As long as people deliberate, they are human and humans have emotions. Mistakes come when you allow your emotions to control you so that you focus more on the emotions rather than the trading. This can often be managed through preparation. If you have completed the research, developed a plan, and followed the strategy step-by-step, you would focus less on stress or fear. Focusing on the details of the plan will enable you to control emotions.

You need to learn to control emotions in order to be able to trade effectively. You need to accept that emotions are a natural part of trading. Even expert traders feel a degree of anxiety when trading because trading is entering the domain of the unknown. It is best to accept these feelings and realize that they are not permanent and then focus on trading.

All day trading starts with a plan. No matter what plan you come with or what trading style you are comfortable with, stick to it. Don't fall victim to the emotional outbursts that will derail you and risk money on trades that don't align with the plan. When trading, you have to keep your emotions out.

Demo accounts

Before registering with a broker or funding an account, you should have fun with the demo account. These are real accounts but do not contain real money invested in trades. They are real accounts equipped for you to practice and learn, using fake money. Some Forex brokers offer a demo account for you, and when you are ready for real trading, fund the account with real money.

last word. When you do what you have to do, prepare the strategy and choose a broker, you need to practice using a journal to record all the trades! Learn from your trading history and make the adjustments that will lead you to get rich!

How much money do you need to become a day trader?

In the fictional world of trading, the virtual streets of the internet are paved with gold. You can sit in front of the machine's screen and slide your fingers over the keys like the pianist who is about to play Beethoven's piece. In a very short time, you will have achieved successful trading and fantastic profits as well and contact the auto showroom to buy the most luxurious cars available.

Meanwhile, in the real world, where dreams like this are millions of miles away from the truth, it is in everyone's interest in trading that there is legislation in place to ensure that every trader has enough money to keep going. That being said, the amount of money that you have to put in your virtual back pocket varies according to the type of trader you want to be and the commodity you want to trade in.

Let me start by placing our traders in the US. Your account balance must be a minimum of $ 25,000, which means that in order to trade, you need to have at least another $ 5,000, and maybe even much more. Let's say you plan to trade more than 4 days a week, which is the minimum required to get into a day trader position. If your reserves are very limited, you risk that through some poor results, your account balance will drop below $ 25,000 and you will therefore be unable to continue day trading until you make up for the difference.

Requirements in other markets are not as severe as the United States and there is no legal limit of $ 25,000. However, you should expect that you will have to open a day trading account with at least $ 10,000 in order to trade short term outside the US - laws vary from market to market. But the really important point that we have to come to is that one of the biggest and most primitive and recurring mistakes that new and inexperienced traders make is financially weak trading - because that could be really disastrous. Losses will happen because the market is fluid and fast-moving and this really happens to expert traders - no one is so smart to the point of exception. You need to be able to cover any losses you have and you will still need to have the money in your account in order to continue trading.

An experienced market trader has a hedging method in that he does not risk more than 1% of his capital on any trade. Even on a modest portion of the trade, your true risk could be $ 12,500. Hence, the answer to the question posed in this article is that you probably need a lot more than you think at first! The principle of work whenever you want in day trading is considered attractive, but you should not forget that money is the basis of everything and that it certainly can end very quickly.

Addictive day trader

When you get into trading, you have to watch yourself closely because there is a big difference between a systematic professional trader who works hard and applies logical rules to everything he does, and a gambler who is addicted to trading for fun, with the same desire to make money. The difference between a trader and an addict is that one trader makes rational decisions and the other makes emotional decisions.

An addict only thinks about the short term, and usually risks money he or she should not play with, whereas an expert investor will only trade with the income he can spend.

For an addictive trader, great success puts him in a state of euphoria, and an outpouring of enthusiasm. Any addict, whether addicted to alcohol, drugs or gambling, knows that one ecstasy is not enough because the addicted mind demands more and more. The same applies to all addictions.

The fact that trading is found online means that it is very easy to start from the moment you wake up. This makes it easy to work but very dangerous for someone with an addictive personality who may be tempted to spend the best time of the day in front of a computer. The temptation to continue trading anything will almost certainly lead to a large volume of retaliation trading and the loss of a lot of money.

Addicts focus on their obsession and a trading addict will look at his investment position at every possible moment. Of course, today's technology fuels the craze when an investment can be verified at any time. A person who is anxious when not getting a way to check his wallet appears to be an addict and is a condition that needs to be treated.

The second end of the behavioral spectrum of cities is the one we see always checking his position in a scenario manner, and trying to deceive his family and friends that he does not sneak out to spend time in front of the computer screen. It's hard for a trading addict to maintain relationships in a normal way - you can imagine the difficulty that a wife and children face in dealing with someone who is totally focused on their stance on investments and market movements.

A person who begins a trading career must realize that in life there is more important than dollars and euros.

Forex Day Trading Strategy

While a strategy may contain many elements and can analyze profit in a number of ways, the strategy is usually classified according to the profit rate and the risk / return ratio.

Your profit rate represents the number of trades you win from the total number of trades you make. Let's say you win 55 out of 100 trades, your win rate is 55%. While it is not required to have a win rate higher than 50%, it is ideal for the majority of day traders, and 55% is an acceptable and achievable ratio.

The risk / return ratio indicates the amount of capital that is risked in order to make a certain profit. If the trader loses 10 pips on a losing trade, but gains 15 pips on winning trades, she makes more on winning trades than she loses on losing trades. This means that even if the trader wins only 50% of her trades, she will make a profit. Therefore, gaining more from winning trades is also an element of strategy that day Forex traders seek.

A higher profit rate for trades means more flexibility with the risk / reward ratio, and a higher risk / reward ratio means that your win rate may be lower and you still can win. For more detailed discussion of profit rate and risk / return ratio.

Scenario : How Much Money Can I Make With Forex Day Trading?

Assuming a trader has $ 5,000 in equity and has a decent win rate of 55% of his trades. He only risks 1% of his capital, that is, $ 50 per trade. This is accomplished through the use of stop loss orders. For this scenario, the stop loss order is placed 5 pips away from the entry price into the trade, and the target is placed 8 pips away.

This means that the potential returns for each trade are 1.6 times greater than the risk (5/8). Remember, your goal is for the winning trades to be greater than the losers.

While trading in a forex pair for two hours during the active time of the day, it is usually possible to make about 5 full trades (complete trade includes entry and exit) using the above parameters. If there are 20 trading days in a month, the trader makes 100 trades per month.

Forex brokers offer leverage of up to 50: 1 (more in some countries). For this example, suppose a trader uses a leverage of 30: 1, as this is usually more than enough for a Forex day trader. Since the trader has $ 5,000 and leverage at 30: 1, the trader is able to place trades of $ 150,000. The risk is still based on the original value: $ 5,000, which keeps the risk limited to a certain portion of the deposited capital.

Forex brokers do not usually charge commissions, but they increase the difference between the bid and the buy price, and thus make it more difficult to gain profit from day trading. ECN brokers offer very small spreads, and make it easier to trade profitably, but they usually charge a fee of around $ 2.5 for every $ 100,000 traded ($ 5 for full trading).

If you day trade a currency pair like the British pound / US dollar, you can risk $ 50 on each trade, and each pip of movement is worth $ 10 with a standard lot (100,000 units of the currency). Therefore, you can take a 1 standard lot position with a 5 pip stop loss, which will keep the risk of losses at $ 50 for the trade. This also means that the profitable trade is worth $ 80 (8 pips x $ 10).

Skip all that, this estimate can show how much a Forex day trader can achieve per month by executing 100 trades:

  • 55 winning trades: 55 x $ 80 = $ 4,400.
  • 45 losing trades: 45 x ($ 50) = ($ 2,250)

The gross profit is $ 4,400 - $ 2,250 - $ 2,150, if no commissions (but the profit rate is likely to be lower).

Your net profit is $ 2,150 - $ 500 = $ 1,650 if you use a commission broker (the quarter rate is likely to be higher).

Assuming that the net profit is $ 1,650, the returns on the account during the month are 33% ($ 1650 / $ 5,000). This may sound very high, and the returns are very good. See the improvements below to see how this trading might be affected.

It will not always be possible to find 5 good daily trades every day, especially when the market has been moving very slowly for an extended period of time.

Slippage is an inevitable part of trading. It results in bigger losses than expected, even when using loss stops. It's common in very fast-moving markets. In order to calculate slippage in your potential earnings calculations, reduce your net profit by 10% (this is a high estimate of slippage, assuming you can avoid staying in announcements of major economic events). This will reduce the potential net profit of your trading account of $ 5,000 to $ 1,485.

You can amend the above scenario based on regular loss stopping point factors and targets, capital and slippage, win rate, position size and commissions.

This simple strategy for controlling risk indicates that with a profit rate of 55%, and more profits from winning trades than losing trades, it is possible to achieve net profits of 20% per month through daily Forex trading. Most traders shouldn't expect this much, and while it sounds simple, it is actually more difficult.

Even so, with a good profit rate and an appropriate risk / reward ratio, a day Forex trader with a good strategy can make between 5 and 15% profit per month thanks to the leverage. And remember, you don't need a lot of capital to get started, and $ 500 to $ 1,000 is usually enough.

Day Trading Strategies and Tips

Day trading is simply the opening and closing of a position within the same day. But for those who are new to trading, this does not mean that you can only trade during the day! The Forex market , for example, is open somewhere in the world at all hours of the day. But day trading is where the short-term trades take place. As prices fluctuate during the day, a trader can learn to take advantage of price declines and spikes. So, profits can be made all the time, but knowing when, where, how and for how much are the questions that must be answered in advance.

  • Learn the market

Although it sounds easy, any day trader who makes good profits has spent a lot of time learning, studying, observing, and testing. In this age, this is easy, as there are a lot of courses on popular websites or newsletters that anyone who wants to become a day trader can subscribe to. Also, there are many day traders who have learned the "secrets of success" who are ready to share a portion of their knowledge with you. Get the best tutor or advisor for your style and learning. Do not enter trading until you learn how day trading works!

  • Start slow

After you take a few tries and feel ready for the real work, it is a good idea to start small. Enter the market gradually and over varying periods. Start small so that you can record what you have been up to, track your successes and failures, and learn from them. Of course, no new trader will start trades that could lead to their bank account being emptied, but putting in too much money is a constant threat. Especially after a series of losses, a trader may continue to throw money into a losing trade and expect a lot of profitFrom the start, you may set a specific amount of money that you can afford to lose. No matter how much you have in your trading account, the majority of day traders risk no more than 1 or 2% of that amount on each trade. Thus at the end of the day, if you do not make the majority of your profit trades, you will at least have funds to continue trading into the next day, and you have not lost your entire account. The same applies to borders and stopping points of losses. Don't get carried away trying to make big profits by not properly maintaining loss stopping points.

Conclusion

Whether day trading suits your needs or not depends on many factors. The main thing is that it depends on your goals and what you hope to achieve in being a day trader. When you know this, you will have to sit back and see if you have the capital and time to do so, and whether you will achieve your goals, even with these areas covered.

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