Having day trading skills, whether in the currency market or the stock market can be extremely stressful and require great dedication. If you're a day trader, regardless of the financial vehicle, you have to be constantly online, watching the price changes and listening to the news regarding that particular currency pair or stock. You are also looking for smaller changes in price and more frequent trades than people who buy and hold stock or those who buy and hold currency for several months or weeks.
Just as day trading in the stock market tends to depend on the use of technical analysis, rather than fundamental information, so does day trading in the forex market.If you already have day trading skills in the stock market, transitioning to forex will be easier. You don't need nearly as much money to be a forex day trader. Unlike day trading in the stock, where you need a minimum of $25,000 in your account to comply with security rules, forex accounts don't require as much money. Normally the brokerage sites set the minimum, so in some cases, you can start with as little as $100.
Day trading forex can begin with smaller amounts because you have the ability to leverage your account. You can leverage up to 50:1 in the US and higher in some other countries. That means it's like trading $50 for every dollar leveraged at the highest ratio. $100 dollars leveraged to the maximum is like have $5,000 in play. While that can bring some great returns if you're successfully trading. It also dramatically increases the risk. You do have the potential of losing everything in just one bad trade.
Forex day trading is also different from stock day trading in the number of options you have to trade. There are so many different stocks from which to select, several of them are bound to show patterns you can easily recognize to make a profit. You only have a limited number of currency pairs in the forex day trading market, making it more difficult to find profitable patterns.
Whether you're day trading stocks or forex, you need to have background knowledge and discipline. Both are mandatory to earning a profit and not losing everything you've invested. Day trading skills can be learned online at various sites, some of which may include brokerage platforms. Besides learning the basics of all types of trading, whether it's day trading or buy and hold, you'll need to learn the technical side of trading. It's far more important in day trading than using fundamental information, although that can cause a stock or currency price to rise or drop suddenly and you do have to know how that applies.
Technical strategies include timing, knowing when to enter a specific market. Since currency pairs are always liquid, unlike stock day trading, ensuring your stock has higher liquidity is unnecessary. Volatility, the price range throughout the day, is an important factor in both stock and forex markets. If you pick a forex currency pair that doesn't change in relationship to one another, there's no opportunity for a trade without a loss due the spread and wouldn't be an opportunity for making money using day trading skills.
Trading signal service for you!Curious about online trading? Want to make more money, be highly successful and have positive experiences in the niche? Welcome to TradingSig.com, a website that will...
Trading knowledge come from education and practiceTrading knowledge don’t magically appear but take hours of study, learning what to look for in a profitable investment. You can achieve this knowledge through reading, but...
This article was printed from TradingSig.com