What is Day Trading?
Day trading is a subset of Forex trading. Forex trading, also known as foreign exchange trading, is the process of trading various types of currency.
A Forex trader uses indicators to decide whether or not the market will shift in favor of a specific type of currency and then buy accordingly. If they make their estimates correctly, they can end up making large sums of money, depending on the amount they invest and the leverage that they use.
This can be a long process. Some people will make an investment (buy a type of currency) and then keep that currency for months or even years at a time until the market does what they want.
This commitment can be overwhelming, especially for new traders, so many people choose to do what is known as day trading. With Forex day trading, all trades are made within a trading day.
People often prefer day trading to regular Forex as they consider it to have a lower risk level.
This is not to say there is no risk, or even only a small amount. It is just less than regular Forex trading because you are only holding onto the securities for a day.
We have dedicated a complete course to Day trading with Expert Advisors. In this course, we will teach you how to trade with 10 Robots simultaniously:
Because the market probably will not shift that much in one day, you probably will not lose that much money even if a trade does not go your way. However, that same logic can prevent you from making large sums of profit if your trade does not perform well quickly.
Terms to Know while Day Trading
There are some general terms that you need to know before you get started with day trading. These are terms you will hear both in your research/any education programs you do as well as while you are actually completing the Forex day trading for beginners.
While they are not all the terms you may come across, it will give you a base to start with. It is important to understand these basics before you get started with any actual trading.
When a seller lists security, they will list it under an ask price, also known as an offer price. This is the lowest amount they plan to take from traders interested in it.
If only one person shows interest, this is the price it will often go for; however, with multiple buyers, it can go up. (See bid price.) With other types of buying/selling, buyers can often haggle a person down to a lower price, that is not usually the case for day trading.
This is the highest amount that a buyer is willing to pay/trade in order to get a certain currency/security.
The buyer or trader with the highest bid price will almost always be the one to secure the trade. In Forex trading (including day trading for beginners), one trader can play the role of the buyer and seller simultaneously, which can make the bid price and the asking price interchangeable.
A limit order is a limit that you pay to ensure that you buy and sell at a certain price based on the market.
Setting a limit order helps a trader ensure that they make as much money as they can, or at least not lose very much. If you are acting as the buyer, it is the highest price you will pay. If you are acting as the seller, it is the lowest price you will take. You may have both types set at one time.
A margin account is an account that you can agree to set up with a brokerage.
With a margin account, you will be able to trade with a currency that you do not personally have but is provided to you by a broker based on the money you can provide. The amount that you can control with every unit of currency you provide is known as leverage.
Some brokers give every trader the same maximum leverage option, while others will give you more if you prove that you have experience and make good trades.
Intraday literally means within the day because it represents something that happens within a single trading day. Usually, a person will use it when they are talking about a price change or changes that happen in a single day.
As a day trader, you will talk mostly about intraday occurrences.
When you secure a trade, you will want to turn it into cash of some sort. This takes time. How long it takes depends on various factors such as the broker, the kind of payout you are looking for, etc. The time it takes for a security to be converted is known as liquidity.
You may also hear the term used in reference to a trader’s capability to transfer a security/securities.
This is a common term in day trading.
A market order is an order that a trader may place if they want to buy or sell securities at the best possible market price at the time the order is placed.
All traders use market indicators to make their decisions when trading. These are indicators that show a trader in what direction the market is moving.
Indicators can be shown in technical data and can also be a feeling that the public seems to hold. Understanding market indicators is key to making profitable trades. Remember, indicators are not foolproof, and predictions can be wrong.
Day traders will often use the strategy known as scalping. When someone is scalping, they make lots of trades, each with small amounts of profit.
When a person makes lots of these trades, they can end up with a substantial amount of profit, despite the small amount gained by individual trades.
Long Trading (Buy)
Long selling is another trading strategy. With this strategy, a trader buys large quantities of securities in hopes that the market will result in the securities gaining value.
If they do, they can sell the large quantity for more than they bought it for and make a profit.
This is another trading strategy where a trader only sells securities that they borrow from a broker. Then they repurchase the securities at a lower price point, give the securities back to the broker, and keep the difference.
If the market results in them having to buy back the securities at a higher price point, the trader loses money.
Benefits of Day Trading
With Forex day trading you do not have to worry about any overnight risk.
Market prices fluctuate the most overnight, up to ten percent. That means while someone is sleeping, they risk losing a lot of money. With day trading, you avoid this risk completely by both buying and selling your assets in a single day. Of course, this also means you may miss out on a substantial overnight increase in profit.
With any kind of trading, education is important to ensure that you make good choices.
However, with day trading, you can learn a lot about what you need to go as you go. As you trade, you will gradually learn more and more trading patterns and trading strategies.
You will also figure out which one(s) work best for you. Remember, it does take time to figure out what you are doing and become truly profitable.
One benefit of all types of Forex trading, including day trading, is that it offers people the chance to work from anywhere, whether that be at home, on vacation, etc.
Why Learn Day Trading
With education, anyone can learn to do day trading, either as an added bonus to their regular income or as their only income. It also does not have to be overly time-consuming if you learn how to trade with robots in automated Forex trading. If you are a beginner, it is super important to learn day trading before you risk any real money.
Skipping education is the biggest mistake that all beginner traders do and many of them regret it after that. They start day trading without any education, without taking a course, or even without watching a single video on YouTube.
These beginner traders see some ad, they open an account with a broker, start trading, and guess what happens? They lose money. 99% of the people that start without any education blow their account in the first 1 month. I’ve been working for 6 different brokers, I’m telling you a statistic. That’s not something I’m guessing.
99% of the people that start without solid education blow their accounts in the first 1 month.
What does it mean to blow your account? You fund an account with $1,000 and you lose it all, this is blowing an account.
So it is very important to learn day trading or to learn to trade in general before you risk your first dollar. I’m recording in December 2020, there are so many possibilities that you can learn online. You really don’t even need to go to any kind of academy, the university even, a school for trading, everything is online. It’s super easy and effortless. Perhaps not effortless because every time you learn something you need to put some effort but it’s much cheaper.
Study Hard To Learn Day Trading
For example, when I wanted to learn to trade, and I mentioned that in many of my videos and courses, I had to choose between 3 academies during this time. One was in London, another one was in Australia, and the third one was in the United States. Obviously, for me living in Bulgaria, the easiest one was to go to London, the cheapest one even if it was super expensive for me.
It was about £4,000 which at that moment, just graduated, it was so expensive I had to take a loan from one of my friends, unfortunately. That’s the only time I have ever taken a loan in my life, it was for my education in London for trading. It was expensive for me. So at that time, I had to actually travel to London, I had to find a place to stay. There were expenses of course and I got a solid education. I did my best to learn. Every day I was first in the academy, and I was always last to leave the academy.
A lot of the traders were really serious all the time. But one of the traders one day asked me, “Petko you don’t stay here to sleep, right? You go home, right?” I said, “Well, I don’t have a home here but yes, I leave the academy late in the evening and I always come first in the morning.” Because I really wanted to grab the maximum out of the guys. There were some really experienced guys that I’ve met and I guess I was very naughty to them, I was very eager to learn.
You Can Learn Day Trading Online
So all the time I was going to their desk and I was asking, “What are you doing? What is that? How?” I was interrupting their trading but I really wanted to learn trading at this time. It was a one-time opportunity so imagine the education there was a few months and I knew that this was my shot. This was the time to learn to trade for me. I said I’m on the spot, I have to learn to trade because when I go back home I probably won’t have a second opportunity to go back there to learn.
So I had to remember it all. I was taking notes and I was staying so many hours in there. Then in the evening I was just reading the notes and preparing the questions for the guys for the next day.
So the reason why I’m telling you all of that is that nowadays you don’t need to do that because everything is online. I mean look, because of the Coronavirus, even the kids are not going to school in most of the countries. They’re not going to school right now in Bulgaria, everything is online.
But when it comes to learning day trading, you have the opportunity nowadays to learn online. There is YouTube where there are so many useful videos that you will find. Of course, I know it’s really hard to decide and to choose the videos to depend on, or the strategies, because there are so many people just promoting different services, they promote brands, they promote brokers, there are so many scam people out there.
Find Reviews Before You Choose A Trading Mentor
So be careful when you are choosing the mentor from which you want to learn day trading. What do you need to look at? Reviews. Find reviews about the guy, the trading academy, or the place from where you want to learn. If there are good reviews then maybe you can trust that.
The second thing, look for some proof from the trader or from the mentor how he trades, what he does. Is he actually showing the screen like what I do in most of my courses?
Is he sharing his trading screen or not? This is why when I record most of my courses, online courses, I don’t show what I’m doing right now, I don’t show a lot of my face. Just at the beginning so the people can get to know me and then I share my screen and I say this is the setup, this is how I trade, here is my account, this is where I open trades, this is where I close trades, this is how I use Robots, and so on. I show the real thing because what a lot of instructors do is just keep talking.
They keep talking, slide shows, theory, you cannot make money out of theory. Not in trading. Maybe in anything else but not in trading.
Something very important, make sure that the guy who is teaching you is real.
They show you a real name and you know this is their real name. So I’m Petko, this is what I say in most of my courses.
Do Not Be Scammed
In my videos I say hello guys, this is Petko Aleksandrov or hello traders, this is Petko Aleksandrov. It’s me, I’m teaching, I’m showing, and I’m a real person. Why am I saying this? Because I don’t know as I said, the statistic about the losing traders, I don’t know about the percentage but I guess more than 50-60% or even worse, 70-80% of the mentors and the traders don’t use their real names.
They just want to sell some product until they get so many bad reviews that they cannot sell it anymore. Then what will they do? They will change the name, another brand, another way of marketing, and they start selling again. Just like the scam brokers work. This is how the scam brokers work. They establish a brand, they scam as many people as they can, and then they change the name, change the location, and open a new brand with a new name and scam the very same people they scammed before.
Why do I say that? This is because, daily, there are so many people being scammed. Thousands of people are being scammed from the Forex brokers. Be careful when you choose your broker and when you choose a place to learn day trading. But make sure you take a good education. Make sure you take it from a trusted place and make sure you have contact with the person. At the moment, we do our support, for example, in the Academy with the forum because I know all of these things from before.
Visit Our Trading Forum
So when establishing the Trading Academy, for example, which is one of my biggest projects that I’m very proud of, when establishing the Trading Academy, one of the things that took me the longest to think about and to come up with the solution was the support to the people, how they will have direct contact with me. Many of you will say email. That’s the easiest thing. What you need to think about, when I answer emails, no one else sees. So if you have a question for me, you send me an email, I will send you the answer but the same question maybe another 10 people will have.
So I decided we need a forum. One day it just clicked in my mind we need a forum because when you ask me a question, I answer, and so many more people will see it in the forum. They will add to this question or even they will answer to you instead of me and we build discussions, we exchange so many different ideas, and as well, for me personally as a trader and as a mentor, the forum is the proof that I’m a real person. Because if we’re scamming the people, then obviously we wouldn’t place a forum.
You can learn a lot about trading in our Forum
Because everybody will be writing there: Hey you know, Petko promised that but he did that. I will not be Petko, probably I will be John. The brokers never have forums. Why? Because they don’t want to have places where the people will start complaining. They can complain as much as they want at the email of the broker, nobody will see that.
So having a forum for me was a great idea that came to me where we will do much more useful support to the people and at the same time, the people will learn from one another. We will build the community with the forum.
You know, when somebody asks me on the email, “Is this for real? Are you promising 30 days money-back guarantee?” We have the 30 days money-back guarantee and somebody asks me in the email, “Is this for real?” Do you know what I answer? We have a forum. That’s it. If it’s not real, if we lie to somebody, obviously, he will complain in the forum and that’s it, we are done. We will lose our name. So forums are another great method to learn day trading.
Give Day Trading The Seriousness It Deserves
Of course, there are a lot of empty talks in there, there are people promoting different stuff in the forums, so please don’t promote anything in the forum. It will be deleted immediately as a post. But the idea of this lecture is because I want you to think of a trader or of trading as a serious business. Imagine this is, let’s say, programming. In order to find work as a developer, you need to learn to write code.
Maybe a lot of companies will hire you and they will teach you to do that but trading is a serious thing. It’s not a hobby, it’s not a passive income that will come just if you are clicking on your mobile to buy and sell on some platform. Take it seriously.
Trading is a serious business, you’re risking ready money. You’re risking your saved capital which is the most painful when you lose money.
First Practice With A Demo Account
Learn to do it in a virtual environment. All brokers offer Demo trading so make sure you learn in a virtual environment and when you’re ready, you can go for it. When you feel comfortable, when you have the skills and knowledge, don’t hurry to risk real money before you are ready for it. Learn to do it, guys.
With trading, you can use what is known as leverage to increase your investment beyond the money that you can actually offer up.
You should not use leverage, or at least not much of it until you have some experience. But when you do, leverage allows you to make a much bigger profit in the time that day trading provides you with.
There are lots of brokers out there that you can use to complete your day trading. You will need to figure out which one works best for you, and it may be different than other traders that you know.
Before you begin to compare brokers, you will need to figure out your personal trading style. Consider how often you trade, what time(s) you want to trade, how much money you wish to use, and what tools you want to have access to.
There a few main things that you want to consider before choosing a broker.
- Cost. There are many things that are involved in the cost. You want to consider what their commission is. A lower commission will result in a higher profit for you. You also want to consider what their minimum deposit requirement is, what their margin rates are, if they have a trading limit, etc. Figuring out all the different cost requirements and investment limits will help you figure out if a broker is right for you.
- Features. You want to consider what features are most important to you. Consider whether a broker offers tools for research and analysis, whether or not their platform is user friendly, is there a mobile platform and is their trading platform quick in execution.
- Customer service. You are trusting a broker with your money, so it is important that they have good customer service. If something goes wrong, you must be sure that you can get in contact with them. Some brokers are hard to contact for issues, while others offer full-time support with extremely short wait times.
Day Trading Strategies
With time, you will begin to develop your own trading strategy, but there a few main types.
Above, you have already read about scalping, long trading, and short selling. Those are the three main types that you use in day trading. There are other Forex trading strategies, such as breakout, reversal, and momentum, but those are primarily long-term trading strategies.
Researching those three strategies and more, even if they are not initially designed for day trading for beginners, can help your figure out your personal trading strategy.
Learning how to correctly use trading patterns will help you make profitable trades. The market tends to repeat cycles over and over again. If you figure out what these key repetitions are, you will know when the best times to buy and sell are.
First, you must learn how to read a market chart, and then you can learn about the patterns that you need to look out for. The most distinguishing factors when it comes to trading are breakouts and reversals. A breakout is when the price moves past a critical level, and a reversal is when the trend changes direction.
Robots and Day Trading
Robots are commonly used with regular or long-term Forex trading, but they can also be used in day trading for beginners. Trading robots, also known as Expert Advisors or EAs, allow you to spend less time in front of the computer and more time doing other things you are interested in.
Trading robots are essentially code that makes the trades for you based on parameters you set/the strategy that you input. This can sound daunting, especially if you do not know how to code. There are online companies that will allow you to input a strategy and then will create a robot for you to download and use.
Day trading can be done by anyone as long as they have the education that they need to make profitable trades. This education can be grasped by reading articles such as this one and by taking an online course for day trading for beginners.
There are many options for online courses available to you, some specifically for Forex trading. You will learn strategies, patterns, and the basics of foreign exchange trading. You can even learn how to use robots to make the process that much simpler. After you have an education, you can begin making money through Forex trading.
What is Forex Trading?
Forex trading is the process of buying and selling various types of currencies. The currencies are traded against each other as exchange rate pairs.
What is Day Trading?
Day trading is part of Forex trading which consists of buying and selling of a security within a single trading day.