Day Trading

Day Trading

Experienced traders often operate the term "day-trading" that can be hard to understand by beginners. This word-combination means buying or selling assets - any financial instrument - exclusively within one day. On this market experienced day-traders can gain profits even with the vague rates' movements, realizing investments of huge amounts in the most liquid foreign currencies, stocks or indexes. The success is gained by the great number of trading operations i.e. several closed transactions. The advantage of day-trading is the possibility of opening counter positions - hedging and by this reaching decreasing of the possibility to suffer loss and decreasing chances to profit.

The great amount of various strategies existing both in day-trading and in other kinds of forex trading gives investor the opportunity to instrument funds more rationally. It is very important for traders to gain the experience of building their own strategy on the basis of the analysis of bulk market information data to get the most precise assessment of the situation on the Forex market, and to be able to make the correct provisions for the direction of the chosen financial instrument in the certain period of time. The informative provisions influence profitable day-trading when trader lowers the risk of loss by investments into several instruments at a time. Some dealing centers do not offer only services on trading strategies training, bur also help acquire skills on trade advisors creation. Experienced traders have elaborated the independent strategy and hence only analytical materials are used there and they do not need such training services.

One of the important components in day-trading is a factor of speed: sometimes sudden changes in market behavior need sudden actions of traders. The most sudden and abrupt fluctuations of charts and quotes are caused by financial news or changes in macroeconomic indexes of various countries. The incorrect presupposition for market movements according to the chosen financial instrument forces traders to change the position immediately and to drive it according to the current rate.

After choosing the financial instrument traders open trading positions. At the next stage traders should determine the possible points of entering the market. The successful forecast is guaranteed by the information gained while analyzing the in-day chart of Japanese candlesticks (candlestick chart) that helps analyze the current market situation as well as analysis of current financial news. This very combination helps gain profit at the selected short-term movement in day-trading.

After analyzing news and after studying out in-day candlesticks traders should pay special attention to technical analysis with paying attention to the location of trend lines and triangles at the chart and try to determine increasing or decreasing tendency of transactions volume.

If day analysis for traders is easy to understand they can issue pending orders. For in-day strategy the most convenient scheme is the issue by traders of two pending orders Stop Loss - they are real and instinctive. There is the so-called boundary of pre-supposed risk. This is the certain level where the real Stop Loss is issued. By saying real order we mean the maximum permissible loss that you can suffer in the unpredictable market behavior.

The instinctive Stop Loss is issued at unexpected trend turn when you need to immediately close the open position. This instinctive level of order issue will signal trader about the incorrect choice of financial instrument movement.

However, as it was mentioned above, each day-trader has his own strategy to which he relies. Many of them issue only real orders determining for them the maximum permissible day loss. When it is reached all trading operations are closed before trading session is finished. Traders-beginners inexperienced enough in day-trading make ugly mistakes: they start moving Stop Loss order further and further relying on the rapid situation change in their favor. Practically in 100 % of such situations the result is the same -loss of the current deposit essentially bigger than it could be.

You may think that day-trading is almost the same as usual trading but after several failures you will understand that you should have certain experience in day-trading. More than 50 % of traders who used to employ day-trading strategy abandoned it after regularly suffering huge losses.

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Day Trading by ODREY WISE

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