Currencies fluctuate in value across time. Their fates are strongly linked to the economies of their originating countries. They are controlled by the respective central banks who decide what denominations to use, how much to print, and when to inject more money into the market. They often react to the market in case the value gets too far up or down. They may also encourage the currency to stay at a certain range if they want to help specific sectors of the economy. For example, an export-oriented economy will want to keep its currency low to spur product demand.
What is Day Trading?
Day Trading Forex Live is the practice of buying and selling securities within the same day. Traders start from a blank slate every morning. They need to find and exploit opportunities quickly as they arise. This is in contrast to long-term traders that pick a security with the intention of holding on to it for as long as possible. For example, many who pick stocks are value traders that base their choice on the underlying worth of a business instead of its current share price. As such, they don’t sell for years or even decades.
Pros and Cons
Day trading is a good fit for forex traders because of the volume and volatility in this market. A lot of stocks see little action so their price tends to remain steady for long periods of time. Day traders need big swings within a day to get substantial profits, especially considering the spread that takes away some of their earnings. The most popular currencies and currency pairs see high activity every single day. For example, the US dollar is highly sensitive to global news and financial data. If traders can time their buys and sells perfectly, then they could earn money quickly.
However, the market movements tend to be frequent and small. Day traders will have a hard time justifying their time and effort unless they bet big on their leads. Not all traders have funds large enough to make the pips count but they can using margin trading to boost their positions. For example, they can magnify their funds by 50x or 100x depending on what their brokers allow. The downside is that they will owe a lot of money if their expected profits do not materialize.
If you want to learn more, then go to Day Trading Forex Live.
