By Cedric Welsch
Forex day trading is in itself part of a foreign exchange strategy. All the literature explains tirelessly that participants must have a strategy and stick to it faithfully. However, there should be more to a strategy than deciding to buy in the morning and sell by the evening.
There are swing traders, long term investors and day traders all active in the market. The first step in a strategy is to decide which kind of player one is. If one’s preference is for being the latter kind of trader then it will be necessary to resist the temptation of suddenly become a long term investor. Day traders have to stick with the philosophy that a bird in the hand is worth two in the bush.
The term ‘day trading ‘ is something of a misnomer when it comes to the forex market. A day does not necessarily start at eight o’clock and end at five for someone in Australia who trades the Euro. There are patterns of volatility that he needs to study.
When the Far East awakes America is going to bed. London opens a few hours after Japan bit it is not until the afternoon in London that New York begins to stir. Patterns of volatility that represent profitable opportunities occur when markets are starting a fresh day, or in some cases when they are about to close.
A day according to the World Wide Web may be regulated by events on the web, so traders cannot afford to stick to routines that have ruled their lives since birth if they are to stay abreast of the game. For some this may constitute a problem but for others it is all part of the new and exciting world.
If a strategy involves taking many small profits and losses over a restricted time period the foreign exchange market with its high liquidity and volumes is ideal. However, the periods of maximum volatility may not be convenient. In such cases some people invest in a robot that will trade automatically for them In many cases a machine might to a better job and stick more rigidly to a system than a human being.
Alertness and quick responses are part of the fun of forex day trading. News of interest rate changes or unemployment statistics can have immediate and significant effects on prices and provide good opportunities for quick profits. Participants need to be alert to news casts and react quickly. Important announcements are often made on Friday mornings in America, resulting in radical rises or falls. For someone in Africa this means remaining stuck fast to a TV screen on Friday afternoon when others are setting out for the week-end break. However, opportunities may be too great too miss and so trading takes over normal lifestyle routines.
About the Author
Only adopt the positive claims you get out of forex daily news, and put aside negative feedbacks. Attempting to digest all the forex news you listen to may not always be good for your trading mind.
