Forex day trading strategies for beginners

Day trading is one of the most popular trading styles, especially in the US. Here are some of the things that you need to know about day trading on forex and other markets, and how you can get started.To get more news about Forex Day Trading, you can visit wikifx.com official website.

What is forex day trading?
Forex day trading involves buying and selling currencies within a single trading day – closing out positions at the end of each day and starting afresh the next. Forex day traders buy and sell multiple currency pairs within the same day, or even multiple times within a day, to take advantage of small market movements.

Also referred to as intra-day trading, day trading is not for the part timer as it takes time, focus, dedication and a specific mindset. It involves making fast decisions, and executing a large number of trades for a relatively small profit each time. It’s generally thought of as the opposite to most investment strategies, where you seek to benefit from price movements over a longer period of time.

Is day trading on the forex market popular?
The forex market is a popular choice for those starting their day trading journey due to the vast number of currency pairs to trade and the high market liquidity – the ease at which currencies can be bought and sold. Day trading forex is often used to eliminate the fees associated with rolling over positions, avoiding the risk of being exposed to overnight market movements.

What you need to know before you start day trading forex
There are a few key factors to consider before you start to day trade forex, as well as any other market, as the practice can require a lot more time than the typical buy and hold strategy.

With investing, the focus is on longer-term market movements, so daily movements have little impact on the overall picture. However, when you day trade, the focus is on the factors that can affect intra-day market behavior. These include:

Liquidity. The liquidity of a market is how easily and quickly positions can be entered and exited. High liquidity is extremely important for day traders, as it’s likely they’ll be executing multiple trades throughout the day
Volatility. The volatility of an asset, or how rapidly the price moves, is an important consideration for day traders. If there’s high volatility expected during the day, the movements can create a lot of opportunities for short-term profits
Trading volume. An asset’s trading volume is a measure of how many times it’s being bought or sold in a given period. A high trading volume shows that there’s a lot of interest, and is useful for identifying entry and exit points
Top 5 forex day trading strategies
Day trading isn’t really a trading strategy itself as it only stipulates that you don’t keep a trade open overnight – it’s simply a trading style. Popular strategies that can be used when day trading, on forex or otherwise, include:
Trend trading
Trend traders attempt to make money by studying the direction of asset prices, and then buying or selling depending on which direction the trend is taking.

If the trend is upwards, with prices making a succession of higher highs, then traders would take a long position and buy the asset. If the trend is downwards, with prices making a succession of lower lows, then traders would take a short position by selling.

Trend trading isn’t exclusively used by day traders because you can keep your position open for as long as the trend continues. However, if you’re sticking to intra-day trading, you’d close it before the day is over.
Swing trading
Swing trading is all about taking advantage of short-term price patterns, based on the assumption that prices never go in one direction in a trend. Instead, swing traders look to profit from both the up and down movements that occur in a shorter time frame.

While trend traders seek to take advantage of long-term market trends, swing traders tend to be more interested in the small reversals in a market’s price movement. They attempt to spot these reversals ahead of time, and trade to make profits from smaller market movements.
Scalping
Scalping is a short-term trading strategy that takes small but frequent profits, focusing on achieving a high win rate. The theory is that you can just as easily build a big trading account by taking smaller profits time and time again, as you can by placing fewer trades and attempting to lock in profits in the long run. Scalping requires a very strict exit strategy as losses can very quickly counteract the profits.
Mean reversion
Mean reversion is based on the theory that prices, and indeed other measures of value such as price-to-earnings (P/E) ratios, always eventually move back towards the historical mean.

The strategy uses technical analysis, such as moving averages, to catch assets whose recent performance has differed considerably from their historical average. Mean reversion traders will then take advantage of the return back to their normal trajectory.
Money flows
The money flow indicator signals whether an asset might be oversold or overbought – using volume and price rather than the asset’s price alone.

It works by comparing the number of trades from the previous day to the current day, to determine whether the money flow was positive or negative. A reading of 80 or higher indicates overbought conditions and is a signal for the trader to sell. Whereas a reading of 20 or below indicates oversold market conditions and is a signal to buy.