Day trading includes transactions that take place within one day. This means that the trader leaves all his positions before the end of the trading session. Such trading is perfect for beginner traders and those who want to be able to earn more in less time.
Markets are volatile, so trends can change during the day, which may result in losses for the day trader. No one will claim that day trading does not involve risks. However, if you follow certain recommendations carefully enough, you can avoid unnecessary losses and become a successful trader. Here are five forex trading tips to help the beginner:
Look for trendy stocks
The most difficult thing for a beginner in day trading is to find a share that has a strong trend. It should be taken into account that deals are made within one day, and the market is constantly changing. This makes it difficult to find the movements to continue the trend. The share you have chosen to trade in shorts can grow all day long. Therefore, it is important to find a strong trend and understand what day it can continue.
If you don’t manage to find a share with a strong trend, it’s better not to enter the market, but to postpone your attempts until the next day. By investing in stocks with a weak trend, you will very often lose money.
Identify entry and exit points in advance
It is very important for a trader to decide in advance, where he or she will enter and exit the deal. Natural emotions such as greed and fear can have a decisive impact on your profit. Even before you start a deal, you need to understand how much you want to take away and how much you are willing to lose. It is better to place stop orders in advance to limit losses and limit orders for profit taking at certain levels.
This will allow you to close the position automatically if the price goes against you. In addition, you don’t have to worry about losses all the time and keep an eye on the price.
Do not trade during the opening a trading session
In the first 15-20 minutes of a trading session, the market can be extremely volatile. Try not to open trades during this period of time. As a rule, the trend is formed in 30 minutes after the beginning of trading, when the price stabilizes.
If the share is in a strong trend and there is an excellent trading signal, the position can be opened after a few minutes. If you are confident in the strength of the trend, you can enter. Otherwise, it is better to wait half an hour.
Limit the number of trades
If you have not taken a specialized training course in scalping, try to limit the number of transactions to 2-3 per day. This necessity is dictated by the fact that trading is a very intense activity. It is physically difficult for a person to concentrate on several deals simultaneously.
It is known that a novice day trader who regularly opens more than three trades a day is unlikely to learn how to trade forex successfully.
Discipline is important
The most important quality for a trader is to maintain discipline throughout the day. If you have opened a trade, reached your daily goal after 2-3 hours, and closed your position, you should not look for a new trade just because you still have time left.
You should understand that you have already missed the impulse, which occurs only in the first half of the trading session. Trading only because you have time is the right path to losses. Such an approach will only destroy the profit you made in the first trade. If the daily goal is reached, be disciplined and leave the market.