How to Successfully Day Trade the Forex Market
Day trading is by far the most popular method of making money from the Forex market but unfortunately many traders are going about it the wrong way. Too many people are blindly taking trades without the correct knowledge and discipline to successfully make a consistent profit. In this article we are going to outline the routine that traders should be following to successfully day trade the Forex Market.
Have you ever placed a trade based purely on a technical basis and wondered why it either goes against you or simply moves sideways for hours even days before you finally give up? The point of any successful day trader is to establish volatility in the market. Volatility is caused by traders moving the market based on expectation of news about to happen or reacting to news that has already been released; so the first exercise is to find which currencies are going to be volatile in any given day.
Finding volatility is not as hard as one might think and can be boiled down to simply looking at the news event calendar which is available in the market analysis section of our main website. The key is to look for high impact news alerts that have just happened or that are about to happen and establish whether or not they are going to be positive for a countries currency or negative. Such alerts may consist of CPI, GDP or employment releases or even a governor of a central bank talking at a conference. Once a currency has been established it is important to research the expectation whether it is to strengthen or weaken. For Example, if an interest rate decision is about to be released in the UK and it expected to be an interest rate cut we can expect the currency to weaken?
Once we have one currency that we have an expectation for we need to find an opposing currency that has the opposite expectation. It may be that we have just had a rate increase in the US the day before or due out in the same day which would make the USD stronger. It is this divergence between the currencies that is going to give us a sure direction; there is no point trading a weak currency against a weak currency or a strong currency against a strong currency as the direction is unpredictable and unreliable.
Once we established our currency pair for the given day we can then refer to our technical charts to find an entry point. At this stage it does not matter what method you use; whether it be using RSI's, stochastic or moving averages crossing. It is more a case of using a method you are comfortable with; by completing the first task you have already given yourself the edge to succeed. It is advised to keep it simple and in fact many traders are very successful simply using support and resistance levels to gauge entry, exit and stop loss levels.
If you have been trading for awhile with little success or are new to the game of Forex trading then put these simple aspects in motion and you will see an instant change in your success rate. Take the trades that you plan and don't take trades that you didn't plan that is the secret to successfully day trading the Forex Market.
Adam discovered very early on that trading Forex required a serious approach to successfully day trade the market for long term profitability. Adam has now been trading for 12 years independently and offers education and forex strategy to both beginners and experienced traders.
