Forex Day Trading



Forex day trading is the act of trading currencies daily…

Thought I wouldn’t go for the obvious?

Ok, ok, I’ll put more effort.

Most financial markets are active Monday through Friday. And while Forex does work 24/7, market liquidity isn’t really top-notch all that time.

What are the best times, and why should we care?

Read on, and you might find your answers.

Day Trading Explained

To make money, you want to speculate in the financial markets.

To speculate, you sit down in your desk and open a trading platform.

You sit in your desk for hours (a work day around 8 hours, basically), and stay on top of what’s happening in the markets.

The reason: you know the most consistent way to make profits, is to be in a position to trade the markets when things happen.

Thus, you sit in your trading desk (home-based or at a firm) and you await to pull the trigger on any good opportunity.

You need two things:

1.    To trade when markets are most liquid (in order to successfully execute orders at the desired price).

2.    A news feed (a free or paid service) to stay in-tune with the markets.

First, let’s talk about point 2. While you can trade with free resources, you won’t match the speed and immediacy of paid newsfeeds which come with audiosquawks.

These audiosquawks will announce market-moving events as they happen, giving you an opportunity to benefit from the move as early as possible.

These services come with their own suite of research, and analysis prepared by well-trained analysts.

SQUAWK!!

So, don’t underestimate how useful such paid services are.

If you’re taking the plunge to day trade for a living, go all the way and purchase such services. This is now your job.

Now, point 1 brings us back to the best times to day trade.

For most markets, this will be at the time most day traders are active.

For example, if you’re trading US equities, you will want to day trade from 7:00 AM to 4:00 PM, New York time.

If you’re trading European equities, then you should be active when the European burses are active (the Euro session in GMT time).

Same for Asian stocks.

But what about Forex?

Forex Day Trading

You can do Forex day trading in basically any time zone you want, yes.

But should you?

Depending on where you’re located, your options might be constrained.

However, if you can, you should focus on the European and American sessions.

Especially in that block of time where both sessions are active:

7 AM to around 12-1 PM, New York time (European afternoon, American morning).

This is Monday through Friday. Weekends and holidays have no liquidity (especially a global holiday).

This is when most of the action will take place, and therefore, when you stand to make some pips!

If you’re in Europe, consider yourself lucky. About 30% of all Forex transactions take place during this session.

You will be able to trade both morning and afternoon sessions with a very liquid market (especially the afternoon).

Where you live matters.

Thus, Forex day trading will be easier for you, since you won’t have to disrupt your sleep cycle (US West Coast Equity traders who wake up at 4:00 AM, I hear you).

With regards to an audiosquawk, the best Forex one is currently Ransquawk (this is NOT an affiliate link).

And what about fundamentals, sentiment, and technicals?

You take ALL of them into account. (Check their respective pages on this site to learn more about each).

Again, if you’re trying to make good money, you can’t afford to waste valuable tools. You will use these (proven) profitable analytical tools.

Now that we know what day trading is, and some specifics of day trading currencies:

Is Forex Day Trading for You?

You already know the answer.

Can you trade in the European or American sessions? (You can still win in the Asian session, it’s just quieter).

Do you want or like to be on your trading desk most of the day?

Do you enjoy jumping into a trade at a lightning-speed pace?

If you really like trading Forex, and you have the time for it, then Forex day trading might do the trick for you.

If you have a full-time job or can’t be at your trading desk all day, then you’ll be better off checking out Forex swing trading.

Still not decided?

Try it for yourself and see! Many things in life have to be lived.

Finale

Wait, but what about a trade’s duration? Or entry and exit strategies?

Isn’t Forex day trading one of the best Forex trading strategies?

Yes it is.

Many people assume day trading is about getting in and out of a trade within a day.

And for many trades, that’s exactly what you’ll do.

However, day trading is about diligently sitting at your desk each day to experience the action.

Do everything you can to get that edge.

Thus, you will put yourself in the best strategic position to take advantage of what’s happening every single day (when the market is on, of course).

You won’t just find one-day opportunities, but you will also see swing trade opportunities, and scalping opportunities.

As someone trying to make a living Forex day trading, you will take advantage of those opportunities even if they don’t fall under the narrow definition of day trading some people seem to hold.

So chill, the world isn’t as cut-out.

Go kill ‘em.

Emil Christopher,

The Forex Economist

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