Day trading Forex

Welcome to daytradingforex.com. This website will help you become a successful day trader by helping you find a good reliable broker and by teaching you how to find and evaluate different trading strategies.

What is day trading?

The term day trading refers to short term trading on different financial markets. A day trader does not invest long term but rather move in and out of the market during the same day. It is common for a day trader to buy and then sell the same asset again within a few minutes of purchasing it. The goal is to make money from the volatility (fluctuating value) that all assets are subject to every single day. Most assets will change in value from one minute to the next. Day traders try to make money from these small fluctuations in the market.

What is FOREX?

The FOREX market, or Foreign Exchange Market, is the largest market in the world. The currency exchange market is a market where currencies are bought and sold. Let’s say that you have USD and need to exchange them for Euro. This is a foreign exchange transaction. You are selling USD and buying Euro. When you exchange money, then the bank or changer will be counterpart in the transactions. When you buy or sell currency on the FOREX market you will not know who the buyer is as millions of people and companies buy and sell currency each day.

Currency worth more than a trillion is traded every single day.

Why is the FOREX market suitable for day trading?

The FOREX market is very suitable for day trading. The market is extremely liquid which makes it easy to move in and out of the market when you want to. You never risk being stuck with a position that you are unable to sell. This is very important when trading with leveraged financial instruments. Where any delay to complete a transaction can cost a lot of money.

The FOREX market also offers a lot of small fluctuations while large rapid swings are rare. It is rare for a currency to move more than a tenth of a percentage point in a day and it is extremely rare that currencies move more than a percent in a day. It does happen, but only seldom. This makes the FOREX market more low risk than the stock market. Stocks can often gain or lose more than one percent in a single market session, and it is not rare for a stock to drop 10% in a single day due to unexpected bad news. These large swings in the stock market are opportunities to make a lot of money, but they might also cost you a lot of money.

The FOREX market is easier to predict using technical analysis than other markets. The value of a stock can fluctuate greatly due to nonfundamental factors such as hype or a rumor of a merger. This is a lot less true for currencies. They are therefore easier to predict.

How to invest in the FOREX market?

It is not practical to buy and sell actual currencies when trading on the currency market. Physical money (bills) are impossible to transfer efficiently. It is easy to transfer digital money kept in currency accounts but you will need to be able to trade substantial sums of money to be able to make a decent profit as a day trader.

A better option is to trade different financial instruments that are based on currency pairs. Their value is determined by the underlying currency pair and it is possible to trade leveraged instruments that allows you to make a decent profit without having to invest a lot of money. Leveraged FOREX instruments can have very large leverage which allows you to make or lose a lot of money on very small fluctuations in the market value of the underlying currency pairs. Some leveraged instruments offer leverage of x500. If the currency pair increase in value by 0.1% you will earn 50% on your investment.

Leveraged trades are sometimes referred to as margin trades.

Popular financial instruments

CFD Certificates

CFD, Contract for Difference, is a good way to day trade in the FOREX market. CFD:s are designed for day trading and make it very easy to assume leveraged short term positions on the currency market. There are a large number of different CFD brokers on the market and you can find one that provides the opportunities that you are looking for. You can read more about CFD:s here.

Binary Options

Binary options are a type of financial instrument that allows you to “bet” on the financial market. They are called binary options because they offer a binary outcome. You either earn a large predefined profit or you lose your entire investment. Binary options are sold by brokers who also act as underwriters. They profit when you lose money and the options are designed to cost you money. You need to be a skilled trader to make money trading these options since they always favour the broker. Binary options are banned within the EU but are still legal on many other markets.  Click the link to see where binary options are legal.

I do not recommend binary options trading. It is too hard to make money. A large percentage of all traders lose money. You can read more about binary options here.