Getting into trading for beginner focuses is intimidating. There are so many things to predict without professional guidance. Many Forex enthusiasts stop at the passion stage without ever trying the unlimited possibilities behind Forex trading themselves. That’s why we wanted to share these three basic day trading strategies to help you get started. Are you ready to explore?
What is Day Trading?
The day trading system allows investors to maximize their profit by navigating the market more efficiently. The system relies on indicators that help traders decide what actions to take during the day.
Essentially, day traders benefit from the small price changes among the currencies. This benefit is quantified when used correctly and maximized when traders leverage a large volume of funds as it multiplies the small profit margin mentioned just now. Therefore, day trading is flexible, fast, and focuses a lot on a trader’s timing and methodology.
Breakout trading is the most basic strategy used by forex traders. It sets an entry point that serves as your baseline. If the price approaches or exceeds the entry point, a “breakout” is expected, suggesting steady growth in the future. In return, the trader enters a long position at that point.
When using the breakout trading strategy, make sure you have a solid exit strategy. As a golden rule, always be realistic and keep risk in mind. Overly greedy traders tend to fail to pull away at the right time and can suffer a significant loss.
Scalping trading is one of the most popular day trading strategies.
As the name suggests, you “scalp” profits little by little and gain significant earnings by repeating this action at a high frequency. The goal here is not to maximize return, but to maximize repetition. You focus on a minimal margin but operate on a much shorter time frame. For example, Instead of making one or two trades throughout the day session, you may be trading every thirty minutes.
Trend Trading, or Momentum Trading
As the name suggests, trend trading focuses on the overall performance of a currency pair and predicts its future movement based on the information you’ve gathered during research. To carry out momentum trading, all you need to do is be patient and wait until the right exit point. Usually, a trader decides to sell when they see signs of reversal.
This is a much more challenging and advanced strategy because it requires extensive research, a solid understanding of the market, and sufficient knowledge in Forex trading. It comes with a much higher risk and needs a trader to stay alert as new information enters the horizon constantly. However, this is also one of the simplest and most effective day trading strategies when used correctly.
Build Your Own Forex Trading Strategies
Of course, it takes more studying and researching before you can put these day strategies to practice. For example, you should always set an exit strategy for yourself, such as an exiting price point or an emergency plan in case things go south.
If you want to go deeper than this quick guide, check out this trading for beginners guide for more extensive information. Remember, trading is a trial and error process that requires consistency, dedication, and accountability. Therefore, focus on educating yourself, starting small, while keeping good records so you can always reflect on past performance and make improvements.