As you may have gathered by now, dealing with a day trading system can be quite a challenge. There is a lot to learn and prepare for that many of us simply don't have the time, experience, or knowledge to do. Therefore, when you are starting out, it's useful to know what the best trading system is going to be. While it's always nice to have a Forex trading strategy to work from, you need to have something beyond that, to help you actually make the grade and start earning some capital.
Because the best Forex trading system that will be suited to you will fit your own market and needs, finding the ideal one can be hard work. However, the best thing to do is to remember that the majority of Forex trading systems are built around various strategies and tend to run with their own foundations, fundamental aspects, and characteristics.
The community of traders using day trading systems is loaded with so many different people, with varying setups, therefore finding the best day trading system is pretty hard – and it depends on so many little factors that there is simply no blanket answer to provide to you. However, you can feel safe in the knowledge that finding the right trading system will typically come from conducting your own research.
Being able to dictate what the best FX day trading system is for you also comes from your own experience – what do you currently know about the actual regime? Do you need something that can help you get into the system from the very start? Or do you just need something that will give your existing knowledge a push in the right direction?
Whatever you pick, you need to start looking at the FX trading systems that are out there – some of them will make outrageous claims that you simply cannot trust, but it should be easy enough to start making the right choices and decisions based on how realistic they sound. Remember, the program has to sound authentic – if it's not built around actionable information, and doesn't provide you with the details that you can actually benefit from in the long term, move onto the next one.
Be prepared to look around and find the right balance for your individual needs – what you know, what you can afford, and what you are willing to invest will all dictate what the top trading systems are for you. In other words, the best system for trading Forex is the most suitable one.
When it comes to trading short-term, you would need to it to be convenient, and you would need to feel confident using it, as this is an activity you would be performing for a few hours almost every day. It is suggested that you try out all of the aforementioned systems on a demo trading account first, before engaging in live account trading. This is applicable even for experienced traders that are considering switching from one system to another.
The practice of day trading is the least popular among professional traders, and the most popular among rookie traders. If you are a rookie, here is the most important Forex day trading tip of all: get some experience with long-term trading. First try to prove yourself by being consistently profitable with a live account for a relatively long period of time, using long-term trading strategies.
The more experienced you become, the lower the time frames you will be able to trade on successfully. If however, you still decide to or even unconsciously slip into day trading, here are a few Forex day trading tips that might help you out. Day trading for beginners usually starts with research. They tend to look out for different ways to improve their trading, and dedicate a vast amount of time to searching for the right starting point.
FX beginner traders are always searching for the perfect indicator or trading system that provides setups with a 100% success rate. Even some experienced professional traders do it from time to time. Unfortunately, perfect systems don't exist, and the only real 'Holy Grail' is proper money management.
Develop a strict trading plan and follow it strictly to manage your risks properly. Smart traders exercise risk management strategies within their trading, in order to minimise and manage the risks effectively. As mentioned above, day trading Forex is riskier than long-term trading, mostly because of the quicker pace and higher frequency of trades. Day traders tend to experience more pressure and have to be able to make decisions quickly, and accept full responsibility for the results.
A Forex trading plan is an absolute must for a day trader. Keep an eye out for averaging down. Simply put, averaging down refers to keeping a losing trade open for too long. To avoid it, cut losing trades in accordance with pre-planned exit strategies. Remember, averaging down when day trading Forex eats up not only your profits, but also your trading time.
A physical stop-loss order is placed at price level in accordance with the risk tolerance, which you should know from your trading plan. Approximately 1-2% is a good level for this. Basically, this is the most you can afford to lose in one trade. The other kind is a mental stop-loss – and this one is enforced by the trader, when they get the feeling that something is going wrong.
Have you ever entered a trade and watched the market make an unexpected turn, and then suddenly realised that the trade is no good and it's time cash out? That's a mental stop. The trick is not confusing it with just panic. That's why both physical and mental stops need to be thought through before entering a trade, and not after.
Retail day traders, specifically those who manage their own rather than somebody else's money, have another rule that their stop-losses must comply to. They set a maximum loss per day that they can afford to withstand financially and mentally. If that point is ever reached, they proceed to remove themselves from the market for the day altogether. They know that no good comes from emotional trading. Inexperienced traders, in contrast, don't know when to get out.
They often feel compelled to make up losses before the day is over, which leads to 'revenge trading', which never ends well for them. Exceptions to all these rules are possible, but must be managed with specific care, and the results must be accepted with full responsibility. Good results must not serve to reinforce regular exceptions. Bad results should be considered as a good reminder as to why these rules exist.
The trend might be able to sustain itself longer than you can remain liquid. Let's consider volatility spikes mixed in with drops in liquidity. When news releases are due, traders should refrain from trading altogether, unless these are the specific market conditions that their trading strategy requires.
Do not trade around the major news releases as the results could be disastrous. The bottom line is this – even if you somehow manage to know what the news will be, there is no way to predict how the market is going to react in the first couple of hours. Bullish news can cause a bearish market jerk and vice versa.
Eventually, the market will return to its trend, but until it does, the environment isn't safe enough to trade. Determining your perfect day trading system for currencies is a hard task. It takes a lot of trial and error, yet it can pay back enormously too. Once you have determined a perfect system, it is then time to select the most appropriate strategy for it.
A strategy will provide you with more detailed information for executing your day trades, while relying on the defined technical indicators and objects. What is also recommended is to try implementing a few systems, and compare which one is the most interesting and comfortable for you. Don't run for profits straight away, the main idea when selecting a system is to be confident in what you are doing.
Also keep in mind that a trader might not be able to protect their account with stop orders around the news. If there is no liquidity on the market, the order won't close. It will continue sleeping until the first available counterparty is willing to trade. So basically, it is only at their price that you will trade. However, the best day trading strategy in Forex is always to trade at your price.