How to become a successful day trader?

One of the best things about Forex is the ability to use it for long-term investments as well as for short-term ones. You can keep your position open for months, but a lot of people prefer to close it within 24 hours. That’s what they call day trading. Let’s see how you can get the best of it.

Manage your risks

Just as everything in Forex, day trading demands control over your losses. Never skip this crucial step!

Usually, traders don’t risk more than 1% of their overall balance. For instance, if you have $2,000, you should not lose more than $20 on a single trade.

Pro-tip: use stop-loss option to control your risks better.

Choose your strategy

Win rate: it’s the number of deals you close in profit out of the general amount of your deals. If you make 100 deals and close 52 of them in profit, your win rate is 52%. Any number above 50% is deemed successful!

Risk/reward: compare your losses to your profit. If you have lost 10 pips but later gained 12 pips, you have reached the bigger amount after all.

Don’t forget the leverage

Make sure you choose your leverage wisely. Stay away from extremely small and extremely big ones, keep it moderate and mind your stop-loss level. Leverage is your best friend if used wisely.

Beware of slippage

Slippage is a sudden price movement that can bring you a significant loss on your deal, even if you have your stop-loss level set. The price just drops extremely fast and, in fact, doesn’t reach the price you set for your stop-loss, establishing much lower instead. To avoid such situations, it’s better to avoid day trading during major economic data releases (don’t forget to check your economic calendar).

Day trading is a perfect opportunity to get a decent amount of money if you regulate your risks properly and keep up with a strategy. Make sure to check out your win rate and maintain it above 50%, as well as choose your leverage, and day trading will bring you 5%-15% a month.

Source   Presented by OctaFXForex Columns
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