Rachel
Forex is deemed to be one of the largest, most popular and most liquid markets today. This trade attracts not only all sorts of traders but also new ones! Some people even get into trading simply because of forex!
So whether you are a newbie in trade or a seasoned trader, you’re surely going to like this trade. And not only because it’s the largest market around, but also because it runs under a decentralized system 24/7.
To start trading with forex, you first need a strategy. There are various kinds of strategies most forex traders use like scalping, swing trading, position trading and so on. But, the MOST used technique is day trading.
To know more about this popular trading strategy, keep reading! Down below will have everything you need to grasp what day trading is:
What is forex day trading?
Forex day trading is a strategy where a trader can buy and sell currencies within a day. This is a short-termed strategy that only lets you open and close a position within a day. It doesn’t matter how many trades you open as long as all trades are closed at the end of the day.
As a forex day trader, you aim to profit from small market movements throughout the day. And since you’ll be opening multiple trades, the odds of making a hefty profit increase. Trades using this technique can last around 15 minutes to 4 hours.
Even if trades don’t last long with this strategy, you’ll still be needing help when speculating. Most day traders use technical tools and analytical tools to help them identify the right entry and exit point for a trade.
What are the best platforms for day trading?
A great trading platform can make all the difference when day trading. Since you’ll be needing various trading tools, working with a good platform will also mean working with a vast scope of good trading tools.
Plus you can also enjoy other perks of quality platforms like great demo accounts, learning material, low transaction costs, little to no added fees and so on. To narrow down your options, here’s a list of quality trading platforms to consider:
Fidelity
This platform is known for its quality order execution. It requires a $0 minimum deposit, $0 stock trades and $0 options per contract.
Plus, it offers a great mobile app for all sorts of investors. But something to also take note of, its margin rate is a bit higher than others and its app falls short for active traders. So if the pros weigh out the cons, then consider this platform!
TradeStation
If you do trades using your desktop, here’s some good news! TradeStation offers one of the most resilient desktop platforms around. It also gained the top Platform Technology award in 2022.
It requires a $0 minimum deposit, $0 stock trades and $0.60 on options per contact. This platform is great for professional traders and also offers cryptocurrency/digital currency trading.
Although, some things to consider are they don’t offer great customer service and learning content is divided between two sites. But if you don’t think the mentioned cons are a deal breaker, consider this app!
Interactive Brokers
TWS or The Interactive Brokers Trader Workstation is one of the largest platforms on the list. Largest, when it comes to the selection of order types. They also boast their low margin rates amongst other platforms.
It requires a $0 minimum deposit, $0 stock trades and $0.60 on options per contact. This platform is great for casual and professional traders since it provides access to global markets and offers a quality mobile app.
Although, something to consider about TWS is that it’s quite complex and is not recommended for beginners. But if you’re someone well aware of the market and trade, you can consider this app!
TD Ameritrade
Another great desktop platform is TD Ameritrade! Its best features include, among many others, paper trading, its earnings analyzer and charts with 489 alternative indicators. It requires a $0 minimum deposit, $0 stock trades and $0.65 on options per contact.
It also offers quality learning material, futures and a wide selection of currency pairs. Although, something to consider about this platform is its $6.95 penny stock fee per trade and not having access to international stocks. But if you trade in a different market, then consider TD Ameritrade!
What is the best currency pair to day trade?
Of course, when it comes to strategies, each one has its own function and process of profiting. And for day trading it pairs with the lowest, expressed as a proportion of the highest pip potential. To help you out, down below is a list of the best currency pairs to day trade:
- EUR/USD – The Euro & US Dollars has an average pip of 1.5.
- GBP/USD – The pound & US Dollars has an average pip of 1.7.
- USD/CAD – The US Dollar & Canadian Dollar has an average pip of 2.0
- USD/JPY – The US Dollar & Japanese Yen has an average pip of 1.4.
- EUR/JPY – The Euro & Japanese Yen has an average pip of 1.8.
- EUR/CHF – The Euro & Swiss francs has an average pip of 1.5.
Depending on where you reside and what currency you’re planning on investing, this list will simply give you an idea of the best to pair for day trading. And based on experience and study, these are the pairs most professional day traders choose and go for.
Take away
Now you know a gist of what day trading is and how it works, you can use this to your advantage! Now you’ll be able to decide if this strategy is for you or even get a heads up on what to expect. Plus you can now choose a good trading platform and know the best currencies to day trade.
Use your new-found knowledge for good and consider day trading! Who knows, this just might be your niche strategy all along! This is perfect for starting traders and traders who are simply looking for a new strategy.
Day trading can require more attention and focus than long-termed strategies. But this strategy is one of the most lucrative ones among others. Plus with a great trading platform, the possibilities for earning big are endless!
