Intraday trading on the forex market
There are quite a few trading strategies on the Forex currency market, but they can all be divided into two main groups.
The first includes those that do not require moving the position to the next day, the second includes longer-term transactions.
Intraday trading allows you to earn the maximum even with a small initial capital; it is this trading option that has allowed most famous traders to make a fortune.
In this article we will talk about the most common trading option, namely intraday trading.
This is what most novice traders choose because of its apparent simplicity. Although, according to statistics, it is long-term transactions that bring the greatest profit.
First of all, I would like to dwell on the main pros and cons of intraday trading on Forex:
The advantages of this type of trading.
1. No swap - no need to pay the broker for transferring the position to the next day; an intraday transaction is opened and closed within one day, which saves the trader from taking into account the difference in lending rates for the currencies that make up the currency pair.
For some currency pairs, the size of these is quite significant and can significantly affect the outcome of the transaction.
2. Control – the ability to control the status of a transaction throughout the entire period of its existence. For long-term trading, you will in any case have to move away from the turned on trading terminal.
3. Large leverage – due to the short duration of transactions, you can use large leverage, which allows you to get decent profits even with a small deposit.
It is not for nothing that the most impressive earnings records were obtained precisely on strategies using intraday trading.
4. The ability to trade against the trend - trading on pullbacks is quite risky, but can bring guaranteed profits with a well-developed strategy.
This strategy works great if you are trading inside a price channel and know exactly the size of the correction in your time frame.
Disadvantages of intraday trading.
1. It is more difficult to determine the trend - as many of the analysts say, there is only one direction of the trend and it can only be identified in the long term. All other rate fluctuations are only rollbacks.
2. Large amount of spread - in relation to the profit received, you have to take into account the size of the profit from one transaction and the size of the spread for this pair.
3. Unavailability of trading instruments - it is practically impossible to use currency pairs with a large spread when intraday trading; the movement of the trend during the day may not cover the difference, and the transaction will remain at a loss.
For example, when trading gold, the commission amount sometimes reaches up to 100 points, while not every day the price of the metal covers such a distance in a day.
4. Time – in order to constantly open and close orders one has to spend quite a lot of time, which creates a significant burden on the trader, and carrying out analysis also requires additional time.
In general, intraday Forex trading is an excellent training ground for training and practicing basic trading skills.
Most popular strategies are available - on a breakout, on news, in price channels, using levels, etc. At the same time, searching for entry points and forecasting trend movements in the short term takes a minimum of time. And it is possible to quickly get the result of a transaction that has always attracted traders.
The most optimal time periods on which to trade, in my opinion, are M30 and H1, but everyone has their own preferences.
For lovers of risk and big earnings, the shortest time periods M5 and M1 are suitable; you can use maximum leverage on them; read more about scalping in the section - http://time-forex.com/skalping