Forex Day Trading – what is it?
Forex
Forex, or the foreign currency exchange market, is traditionally associated with large financial institutions, such as central banks, commercial banks, hedge funds and multinational corporations. It is an over the counter (OTC) market, which means it does not have a central exchange. Trades are instead executed directly between the two trading parties. Traditionally, this involved professionals or their brokers.
Nowadays, forex has become increasingly attractive to private individuals and access is enabled by the internet. In principle, all you need to start trading forex is a personal computer, an internet connection and the services of a personal forex broker.
Forex Day Trading
Forex day trading involves opening and closing positions on the same currency trading day. The main advantage of this form of trading is that it allows you to concentrate on one or more trades in a relatively short time span. Also, as forex is a 24-hour market, the trading day can start at any time; you are not confined to the 24-hour clock as it applies in your geographical location. This makes it an attractive option for traders who have other commitments during the day or night.
Risk Management
Although forex day trading may be limited in terms of time, it does not mean that potential profits or losses are similarly restricted. Forex trends can be sudden and sharp, even over a matter of minutes, especially when you consider the value of the trading position after leverage. Guarding against losses can be achieved by constantly monitoring open positions and by closing losing positions as soon as soon as they are recognised.