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Short-Term Forex Trading Strategies

Short-Term Forex Trading Strategies

Day Traders use high amounts of leverage and short-term trading strategies to capitalize on small price movements in highly liquid stocks or currencies. Day trading is an extremely stressful and expensive full-time job. True day traders do not own any stocks overnight because of the extreme risk that prices will change radically from one day to the next.

As the prices go up and down, the day trader must be alert as to when to sell his pair or wait for the moment to hold on it. Day trading most commonly refers to the practice of buying and selling forex or stocks during the day such that at the end of the day there has been no net change in position. Any day trader should know up front how much they need to make to cover expenses and break even.

Day traders will hold a position or stock until it goes up to about five or six pips or cents and then start selling. You also need to master the psychology of day trading. A novice day trader should normally have day trading capital of at least $20,000 to start, so this is not a business to undertake lightly.

Trading successfully is by no means a simple matter. Be aware that day trading does not offer the protection of an advisor who can tell you whether a particular investment is suitable to your financial goals. The Forex market is the largest financial market in the world with average daily trading of the currencies going over US$2.6 trillion.

Behind all of the possible financial rewards of day trading lies the potential for financial disaster. Don’t begin your day trading with money that you can not afford to lose.

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