Many people are entering in the Forex trading platform as it is one of the easiest ways to make profits by investing the least amount of money. The market is highly volatile and easily accessible. Since this platform remains open for 24 hours, people can enter trades at any time. If a trader catches a perfect opportunity to enter, he can indeed make hundreds of dollars from that particular trade.
There are several trading styles in the CFD industry, and among all of them, day trading is the easiest style to earn a decent amount of profit within a short time. However, being a day trader is not so easy. To be an expert day investor, you must have years of experiences about this style.
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How do day traders trade?
To understand the way these investors trade in the FX, you have to realize the timeframe at first. In Forex, investors must choose two different timeframes –
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Lower timeframe
It ranges from 5 minutes to 15 minutes, or even an hour. People who use this timeframe for trading are highly skilled, and they can make money quickly. There are several issues that have to be handled in there. Such as, you have to make a decision quickly to catch the right move. View website of Saxo and learn more about the time frame selection. Note that higher time frame trading is applicable for the skilled traders only. The novice UK traders should carefully trade in lower time frame as the risk factor is very high.
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Higher timeframe
It ranges from a day to several weeks or months. Position traders use this timeframe to enter in the trading world. This is easier than the lower timeframe because the beginner, in this case, have time to think about what to do. Therefore, choosing higher timeframe is a good decision for the newbies.
Day trading means that an investor has to buy a financial instrument and sell it at the same day. There is no probability that he will surely become successful. He may win or may lose based on the market condition.
How do day traders manage the risks?
It is a common question that the newbie asks the most because most of them want to be a professional investor. Let’s take a look, how to they handle the challenges –
Strategy
These investors follow a strict strategy. It is true that they earn a good amount of profits from a single trade. Since they are day traders, things are a lot faster for them. Everything is included in their plan. They analyze the risk: reward ratio and the win rate to enter a trade.
Often the beginners don’t understand how the platform calculates the win rate. It is quite simple. For instance, an investor has won 60 trades out of the 100. Therefore, the win rate will be 60%. Remember that the win-rate above 50% is considered ideal, but above 55% is attainable.
Risk management
No day investors forget to include this in their strategies because they are well aware of their trading account. They can indeed earn money quickly, but at the same time, they are also careful about protecting their investment. These people choose their opportunities very carefully and know how to handle the technical indicators, and where to use them. Because of their expertise and quick thinking, they are so brilliant and successful in the business world. This is why newbies want to be like them.
Before entering the market, they set their lot size and stop-loss order so that their money can be protected if there is a crash. They use the technical indicators to predict the approaching direction of the price. Therefore, it becomes easier for them to make a decision fast and effectively.
These are the basic discussions about the day-traders. To know more about them, you can visit other websites and can investigate more about them.