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How to Day Trade Forex

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5:32 am
June 27, 2013

John Smith


posts 26

Learn to day trade forex. But I want to make a few facts very clear before you embark on your journey of forex trading. These facts should be the foundation of any forex system that you develop.

The most important thing that you should make very clear and understand is that forex is not a get rich quick scheme. Skilled forex traders can and in fact do make good profits in forex trading. However like any other business whether small or big, success just doesn't happen overnight, in a few weeks or in a few months. You should use this great formula for success: Profits=Patience+Practice+Persistence.

There is no substitute for hard work and diligence. You should make it very clear. First practice trading on a demo account. Do not open a live trading account until you become profitable on your demo account. Pretend that virtual money is your own real money when you trade on the demo account. You can only be successful if you stick to a system and a plan. Double you demo account first, three times in a row.

In the beginning, just choose two major currency pairs that you will trade. It becomes very difficult to keep tab on the all four. You need to start with a major currency pair because the spread is the best and they are the most liquid. The EURUSD pair is the most commonly traded pair and usually has the best spread because of its liquidity.

USDCHF is the most volatile pair among the major pair. It moves the most during the trading week. USDJPY moves a lot on the news out of Japan. GBPUSD is the most stable among the major currency pairs.

You should follow and understand the daily forex news and analysis of the professional currency analyst on a daily basis. It is important for you to get a bird's eye view of the currency markets. You should also know and understand what the key technical support and resistance levels are in the currency pair that you want to trade. You should know the news that affects the prices of the major pair that you want to trade.

Support is the predicted level when buying pressure overcomes the selling pressure. It is at this point the currency pair moves up on the charts. Buy at the support level. Resistance is the predicted level when selling pressure overcomes the buying pressure. It is where the currency pair moves down on the charts. Sell on the resistance level.

Fortunately all the best forex news and analysis is available freely online. While you are reading the technical news and analysis, write down on a piece of paper what direction the analyst are saying about the currency pair that you are trading and the key support and resistance level.

You should learn technical analysis and how to use technical indicators. Never ever trade without stop losses! Learn how to use technical indicators on the charts. Learn to be patient.

It is important when you are trading to be disciplined. Stick to a plan. Don't just trade your gut feeling. Depending on your risk capital and strategy, set your stop losses accordingly. 

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