1. Trend Trading
Process trading is the process of identifying a general trend by looking at a long-term chart.
If a general trend has been identified, you can move to a lower time chart and look for trading opportunities in the direction of that trend.
2. Anti-trend trading
Counter-day trading is close to trend trading as you will look for trades in the opposite direction after identifying the general trend.
The goal here is to identify the end of the trend and enter the market before it returns. It’s a little risky, but the benefits can be huge.
3. Row trade
Range trading, also mentioned as channel trading, could also be a day trading method that starts with an understanding of the most recent market activity.
The trader checks the chart trends to determine the standard highs and lows during the day as well as the difference between these points.
For example, if the price rises or falls above the level of support or resistance, the trader can decide or sell based on his perception of the direction of the market.
4. Breakthrough trade
A breakout trade is when you check the pair’s range at certain times of the day and then place trades on both sides to focus on the breakout in both directions.
This is especially useful when a pair is trading in a narrow range, as it usually indicates that the pair is making a major move.
The task here is to position yourself so that when the movement takes place, you are ready to catch your wave!
5. News business
News trading is one of the most popular short-term trading strategies used by day traders.
Anyone who buys and sells news is less concerned with schedules and technical research. They are waiting for the knowledge that they think will push prices in one direction or another.
This information is obtained through economic data, such as unemployment, interest rates, or inflation, or it may just be new news.
Well, now that you know the different types of day trading strategies, it’s time to become a day trader.
We look at how you can become a currency day trader.
How to become a day trader?
Professional day traders who don’t trade for fun for a living are well established. They usually have a good understanding of the field as well.
Learn, learn and learn
Individuals who try to trade on a daily basis without understanding the dynamics of the market often lose out. A day trader should be able to interpret technical analysis and charts. Charts, however, can be deceptive if you don’t fully understand the business you understand and the assets it contains. Do your best to learn the nuances of the pairs you are trading.
Every professional Forex day trader manages risk; it is one of the most important components of long-term profitability.
To start, keep your risk as low as possible in each trade, ideally 1% or less. This means that if your account is $ 3,000, you cannot lose more than $ 30 in a single trade. This may seem insignificant, but losses increase, and even a successful day trading strategy can suffer a number of losses.
The trader should have a strategic advantage over the rest of the market. As mentioned earlier, day traders use a number of methodologies. These methods are fine-tuned as long as they bring in profits and effectively limit losses.
A profitable strategy is worthless if it is not combined with discipline. Many day traders lose a lot of money because they don’t run a business that meets their expectations. as the saying goes. Without discipline, success is unlikely.
Day traders are heavily dependent on market volatility for profit. A pair that moves a lot during the day can be attractive to a day trader. This can be due to various factors, such as income release, market spirit, or even general economic news.
Example of day trading
Assume that one trader has $ 5,000 and the winning rate in his trade is 55%. They only spend 1% of their money or $ 50 per trade. The stop-loss command is used to achieve this. The stop-loss order is placed 5 pips from the trade entry price and the profit target is 8 pips.
This means that the potential profit is 1.6 times higher than the risk for each trade (8 pips divided by 5 pips).
Keep in mind that you want the winners to outweigh the losers.
Using the above conditions, there are usually about five revolving trades (turnover includes entry and exit) when trading currency pairs in fashion.