There is no hard and fast rule for Day Trading. It’s a part-time job for many people who are seeking financial independence. Day traders usually make instant profits on their investments, but a wrong strategy or move can eat up all their profits.
Many day traders end up losing money because of their greed and lack of knowledge. They play a gambling strategy without even knowing about the market. They pour money into what seems to work, and that’s why they end up losing all their money in one shot.
Today we are sharing some day trading strategies and money management formulas that every day trader needs to follow in order to achieve financial success.
Day Trading Strategies & Tips for Forex
If you want to be successful as a day trader, then following these strategies will surely fuel your journey:
Stay Updated & Study Trends
No matter if you are going to invest in commodities or forex market as a day trader, always keep an eye on current news to predict market behavior. The events, news, and investments impact the forex trade market trends from time to time.
Select your areas where you want to invest and then track them for a week. Update yourself with all the news and events surrounding your targeted market, and then pick a time when you think that market will be in your favor. Do not pour all your money into a single trade even if you are sure about its trend. Many day traders face huge losses when they put all their eggs in a single basket.
It’s not always a good idea to invest all your savings in the forex market. Long-term trading is another game, but if you are a day trader, then invest smaller chunks and play with it to understand the market. Invest in various areas of your interest and then keep track of your trades. Many people lose all their savings because of their greed. So, starting small is a wise thing to do in order to raise more money and then diversify your investments.
Never expect a hundred percent returns until or unless you have deeply studied that market. Keep your expectations out of greed, a good expected return for most day traders is 50-60%. However, some of the day traders have a more sophisticated money management approach where they play on a safer side.
Keep a Balance
You should be aware of what’s on both sides of your coin. Suppose you are investing $1000 in forex trades and you are expecting $800 returns without determining the risk then you might lose it all. There is a general rule in day trading and forex market that, “higher returns often mean higher risks”. So, if you are expecting a high return from your trade, then you should also estimate the risk associated with it. You should also set a percentage of your trade money that you can bear to lose. Maybe, you have a risk tolerance of %2 from your total trade balance. In this case, you must not place a trade order having a higher risk percentage.
Have your own Plan
It’s not always necessary to follow other’s trading plans. You should always trade with your own strategy and plan. Every person has a different risk tolerance and their investments also vary. So, we cannot provide them the same game plan for day trading. Your trading plans should be based upon your market knowledge, goals, and risk capacity. It totally depends on you whether you want to be an aggressive trader or you want to play it safe with patience.
Money Management Formula
There is a simple money management formula for all-day traders who want safely to make profits without losing all their capital. First of all, you should set aside the spare money that you’ll be using for trade. You can also specify a percentage of your income that you are willing to put in the forex or stock market. Once you have capital in your trading account then it’s time to gain some knowledge and play it safely.
If you want to manage your trade risk after placing your trade order then Stop-Loss is your best option. Here you can specify your risk tolerance and trade will be automatically closed if you are losing your money. The “SL” option is available in trading applications to utilize this feature. You can also specify a take-profit “TP” filter, which will automatically close your trade if the market hits your specified take-profit order.
If you want to be successful in the Forex market then you need the right signals to invest in profitable currencies. Trading Kit platform provides you the real-time data along with proper signals to dominate the market and make huge profits. Their professional software provides you the most reliable indicators that will pave your way to Forex’s success as a day trader.