Techniques In Forex Day Trading

Forex day trading tends to be very lucrative. One need to understand the "personality" of the market one is trading in, no matter what type, as every market has its own characteristics. The forex market is no different. The prime focus of this article is throwing light on the techniques in forex day trading, followed by successful day traders.

Let us now go through the techniques in forex day trading online by which day traders attempt to make profits.

Trend Following

In the trend following techniques in forex day trading, assumes that financial instruments which have been gaining steadily will continue to do so or vice versa. The day trader buys instrument which has been rising, or sells a falling one, hoping that the trend will continue.

Contrarian investing

This is a market timing techniques in forex day trading online. Assuming that the financial instruments which have been gaining steadily will now show a reverse and start loweirng, the contrarian day trader buys an instrument which has been falling or short-sells a rising one.

Range trading

Another of the techniques followed in forex day trading, here the trader watches the stocks that are either rising off a support price or falling off a resistance price. The range day trader buys the stock at or near the bottom, and sells it when high.

Scalping

Scalping as a forex day trading techniques is a trading style where small price gaps created by the bid-ask spread is exploited. Involving establishment and liquidation of a position quickly, usually within minutes or even seconds, day traders make quick profits. It involves technical analysis concepts such as over/under-bought, support and resistance zones as well as trendline.

News Playing

News playing is primarily the zone of the forex day trader. This basic technique in forex day trading involves buying just after the announcement of a good news, or short sell on bad news. Such new events provide enormous volatility in the market and therefore alos provide greatest chance for quick profits.

Price action

There are groups of day traders known as "Price Action Traders" who rely on technical analysis but do not rely on conventional indicators. These traders follow on a combination of price movement, chart patterns, volume, and other raw market data to decide upon a trade. These techniques followed in forex day trading are seen as a "simplistic" and "minimalist" approach to trading, but require a deep understanding of how markets work.

Artificial Intelligence

With the increase in the processing power of computers, it is easier to evaluate the forex market on a deeper level. This forex day trading technique involves tracking words and phrases in news articles, and then noting the changes in price as an action. Through this they try to infer whether the word or phrase is positive or negative. This technology can then be leveraged to explore the historical significance of a news item.

In conclusion, it is enough to mention that a forex day trader has to well prepared, not only in the basic day trading rules, skills and principles, but also well versed with the forex day trading techniques mentioned above.