Day Trading Foreign Currency


Foreign currency trading is a high-risk, high-reward business. You need to devise strategies to make profits in the market on a sustained basis. Always remember that day trading in any asset class is not the ideal way if you really want to have a long term perspective.

Day trading in Forex is the same concept as day trading in equities markets. You take a short term bet on the price movements of various currencies in your portfolio. Thus, you gain or lose depending upon the intra day fluctuations in prices of these currencies. Whether you are long or short at a particular point of time in a day depends upon your assessment of the likelihood movement of prices later on during the day. Day trading foreign currency means taking a very short term view of the market and is fraught with risks and possibility of huge capital losses.

It is always advisable to have a long term outlook especially in the highly volatile foreign currency market. This way, you are not dependent on the vagaries of intra day shocks and expect your capital to build over a period of time. Have an assessment of economy, performance on inflation front, policies of central banks of the country and then take an informed decision, without worrying about short terms movements. A large number of traders have lost heavily while betting on day trading foreign currency. There is still no fool proof strategy which can shield you from losses if you are having an extremely short horizon.

If you really want to start in day trading, take smaller bets, just to have a feel of the market. Keep your stakes on a limited scale and close out as soon as you get a chance. Do not forget to place a stop loss position if you want to avoid carnage and "scalp out" at an opportune time. It is a high-risk proposition and there are better ways to make money than day trading foreign currency.

When you get enamored by so called success stories of day trading foreign currency, remember that Rome was not built in a day. It takes time to build your fortune. Never allow greed to overcome good, sound reasoning.

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