Well, now we will discuss thoroughly day trader if previously I have written a lot of information about scalping trading.
What is a day trader? Day Trader is a term in forex to refer to traders who have a short-term trading style, by opening and closing trading positions on the forex market within one day or even less.
So this includes short-term trading, but not scalping.
Traders choose Day Trading in forex because they don’t like to maintain trading positions for days and they want to get certainty of profit or loss quickly, definitively in one day.
All traders allow choosing to become Trader Day. However, the Day Trading method in forex is not necessarily suitable for all traders. In fact, most people who try to become Day Traders, often fail and even end up losing.
What is being a day trader like?
So, what exactly is a forex trader using a day trading strategy?
According to Corry Mitchel, a former author for The Balance site and Day Trading expert said that the forex trader’s lifestyle is, in fact, the way the day-to-day trading strategy is.
Everything depends on each discipline.
What does a day trader do? Mitchel tells the story of Day Trader in doing his job, which is a day trader’s lifestyle.
Choosing Time Trading.
Forex market is divided into four sessions, each session has a varied moving average.
For example in the Tokyo session often the low moving average ranges from 20-30 pips, but the story is different if there is high impact news.
The European or London session is the busiest market because many banks around the world are operating.
Allowing money to easily move from hand to hand.
The New York session was the second busiest session.
Especially when overlapping, where the European and New York sessions met in one time allowing the price pattern to be more volatile.
Meanwhile, the Sidney session often becomes volatile if there is high impact news.
So by choosing the trading time, this will also make your health awake because you don’t have to be in front of a computer screen.
Prepare your trade
Working from home as a Day Trader allows us to do anything because we have more free time.
Maybe this is what makes some people interested in the lifestyle of forex traders with the Day Trading strategy.
A Day Trader can wake up at least one hour before starting trading. Breakfast, then prepare mentally for the day.
Carry out Day Trading.
According to Mitchel, the best opportunity usually appears one hour before the opening of the US market until the first one-two hours thereafter.
Mitchel himself only traded in the American session.
In two hours he will be completely focused. At that time, something rarely happens. The pattern is the same every day, so it can be learned.
This will make it easier for a Day Trader, the task is to find a simple trading setup, execute it, then set it according to the strategy.
Finally, a Trader Day will end the trading day by doing a review.
Mitchell ended by taking a screenshot of his trading chart that day. Then he marks the trading levels, writes down the profit or loss of each trade, and makes a final note. Write down your note with information about:
- Length of trading (in hours).
- The number of positions opened.
- The number of trades profit and total all profit in units of pip or currency; nor for loss trading results.
- Net profit or loss in pip or currency.
For forex trading, it’s better to record the results in pip units. Because this information is easily measured.
Writing down the results of trading in units of Dollars is possible to cause estimation errors; because the balance in our trading account may fluctuate, the recorded trading results can be bigger or smaller than they should be.
Save the screenshot with a name containing the date, then save it in a folder that allows us to review later. Do a review at the end of every day, weekend, and a big review at the end of the month.
Find out what mistake that make you lose and which parts need improvisation.
If at the bank or office, the end of the month is closing the book, then the lifestyle of forex traders who use the Day Trading strategy is not much different.
The end of the month is the time to review the trades that have been conducted for one month.
What is a day trader salary?
How many salary day traders, the answer is drastically varied, sometimes only a few days traders lose their capital, and there are still those who use capital to generate high monthly income.
When a trader thinks of income, it is mostly influenced by risk management and strategy.
If you implement a solid trading strategy, take steps to manage risk, and improve efforts, you can learn to more effectively pursue the benefits of day trading.
Professional day traders look for profit – usually keeping the risk on each trade very small, usually less than one percent of their trading capital.
For example, if you trade a $ 40,000 stock account, don’t risk more than $ 400 per trade (1 percent of $ 40,000).
This strategy becomes two components, the level of victory and profit relative to losses.
The win rate is how many times you get a trading profit, divided by the total number of trades.
For example a strategy of winning 60 out of 100 trades, the winning rate is 60 divided by 100, equal to 60 percent.
If you have a very high victory, but your profit is much smaller than losing trades, it means that it won’t be profitable.
In addition to ideally having a win rate of close to 50 percent or higher, the relative profit to loss (reward for risk ratio) is another factor that must be considered.
Most day traders look for their profits to be greater than loss, usually around 1.5 times or more.
For example, if risking $ 300 in trading (maximum potential loss), traders attempt to generate at least $ 450 in profitable trades.
How Many Trader Day Makes.
For the scenario below, suppose that the winner is 1.5 times greater than the loss. Traders have a 55 percent win rate and $ 30,000 trading capital. Not more than one percent of capital can be wagered on one trade.
Five trade rounds are carried out every day (rounds of rounds including entry and exit).
There are 20 trading days in a month, so that means taking 100 rounds of trade per month. Commissions and fees are $ 30, round trip ($ 15 in and $ 15 out).
Margin, or 4: 1 leverage, is used on an account. This means that even though traders only have $ 30,000, they can use up to $ 120,000 as long as all positions are closed before the end of the trading session. The total capital of $ 30,000 is recommended.
Example: Trader Day Strategy
What percentage day traders make money? Assume a day trading strategy where the stop loss is 20 pips and your target is 30.
If your account balance is $ 30,000, with risk 1% hence the maximum risk per trade is $ 300.
With stop loss 20, you can take 15 $ per pip to adjust the position size ($ 300/20) on each trade and remain within your $ 300 risk limit.
Working with this strategy, here is an example of how much you have the potential to generate daily profit.
55 trades is profit:
55 x 30 x 15 $ = $ 24,750
45 trades are lost: 45 x – 20 x 15 = ($ 13,500)
Your gross profit is $ 24,750 – $ 13,500 = $ 11,250.
This is a theoretical return, and several factors can and will reduce your profits; read the explanation below to know how this number can be adjusted for the real world.
The reward-risk ratio of 1.5 is used because it is quite conservative and reflects opportunities that occur throughout the day.
The initial capital of $ 30,000 is also an estimated balance to start trading; more is better
Stop loss 20 and target 30 are used only as examples. this may need to be reduced, but it’s likely to be expanded.
When a loss occurs, you must reduce the size of the position taken to maintain the same level of risk protection.
Day trader average salary
The scenario above shows the possibility to generate more than 20 percent per month with day trading, theoretically.
This is very high according to general standards, and most traders should not expect to make this when calculating real-world problems such as slippage and not always being able to get the full position they want to win the trade.
Even so, with a 55 percent win rate and with a strategy that results in a bigger winner than the loser, making 5 percent to 15 percent + per month is possible, but not easy, even though the number makes it look like that, this still considered percent of day traders lose money
These numbers represent what is possible for those who become successful day trading stocks; remember, though, daily trading has a very low success rate, especially among men.
What makes a day trader successful.
To be a successful day trader, you need to also understand whether this job is suitable for you or not, the main character of a trader is a day trader.
- You don’t like to let positions trade floating for more than a day.
- You can analyze the market on H4 or H1 timeframes.
- You have time to analyze the market at the beginning of the trading session and then monitor your trading position throughout the day.
- You always want to get certainty whether profit or not every day.
On the other hand, work as a Day Trader may not be suitable for you if:
- You prefer trading with a longer term (D1, W1, Monthly), or just the opposite, preferring trading in the shorter term (time frame M30, M10, M5).
- You don’t have time to analyze the market every day and monitor it all day.
- You have another full-time livelihood.
A Day Trader usually transacts several times a day by finding the acquisition of several points per transaction.
Then accumulates to get a profit or loss at the end of the day.
The strategy of a Day Trader is to utilize price movements in one trading day.
The principle of Day trader is the market will always offer many opportunities every day.
Difficulties of a Day Trader.
The biggest problem being a day trader is the risk of losing capital.
This is a business that will test your courage and patience because you must always monitor the trading screen, absorb, and process all the information that appears, then have to make a quick decision to buy or sell at any pair.
This is a fairly complicated job and requires a lot of skills.
Therefore, beginners are not recommended for day traders in forex.
This is an art of trading that should be practiced by professionals with years of experience and have treated day trading as the main job.
According to the survey, 90 percent who tried to become a Day Trader must have faced failure.
Therefore, if you want to have the opportunity to succeed, try your best to do the best for your trading business.
Tips for Day Trading Success.
Some tips that will help you become a successful day trader.
Know the Basics.
First of all, you need to know how the forex market works.
Learn how the trading process runs from A to Z. Besides reading articles and books about trading, another smart alternative is to open a virtual trading account.
You can freely practice without using real funds.
Do demo trading to the point where you have understood the market rhythm, and after that just do for live trading.
Lots of forex brokers offer demo accounts that you can use that preferable.
If likely ready to start with a real account, TenkoFX offer a low minimum deposit even with 10$
Follow Fundamental and Daily Market Sentiments.
Fundamental news can have a strong impact on daily market movements and market players’ biases.
The release of important news from the United States, for example, can immediately reverse price movements in the forex market if previously not expected by market participants.
Therefore, you need to follow the forex calendar and mark high-impact time that can affect the Day Trading results in forex.
Keep Your Psychology in Order to Stay Calm.
Among the list of fatal errors in trading, the inability to control the psychology of the self usually enters the last sequence.
However, the number of victims due to psychological factors is actually dominant among Trader Day.
The reason may be due to fatigue monitoring the market throughout the day, greedy after just winning big, or easily giving up after failing two or three times.
Avoid the Two Main Mistakes
- Too focused on profit and loss, but not enough to pay attention to the trading process.
- Ignore the trading setup and not adjust it to yourself.
If your strategy has shown resilience from time to time.
The only thing you need to pay attention to is the execution of a consistent plan.
Then the profit/loss will be taken care of by itself.
What is the day trader rule
There are eleven Day Trader rules that you should not break.
Read the rules carefully one by one so that your trading account is safe and far from the danger of heavy losses.
Day Trading Is Not An Investment.
First rule. You must understand that Day Trading is not a form of investment.
Day Trading is a pure short-term activity carried out to benefit from the difference in price movements in one day.
There are many Day Trading risks. One of them, the risk of volatility in which fluctuations (ups and downs) of currencies occur so quickly.
This can be profitable if it is used wisely, but it can be disastrous if you open a position without good consideration of analysis and money management.
Day Trading Is Not Gambling
The second, day trader rule never has a mindset that Day Trading is gambling.
This mindset will make you trade without a plan, and tend to hunt profit randomly or at will.
Although Day Trading is not an investment, this activity requires traders to Open Buy or Sell Positions based on the mature analysis.
Traders who have a mindset as gamblers will consider the market as a game area, not as a place to do business.
his kind of trader will eventually lose money. Meanwhile, those who see trading as a business area will last longer.
Because they are able to generate profits consistently by referring to Money Management and mature analysis.
Apply 5W and 1H in Day Trading
The third Day Trading rule, you must have careful planning in trading.
This plan will make your trading more focused.
If you are confused about where to start, you can apply the 5W and 1H strategies, namely What, Who, When, Where, Why, and How.
Here is an example of the explanation
- What: currency pair that will be used for trading.
- Who: which broker will be used.
- When: When you can start trading.
- Where: Are you going to trade through a platform application, WebTrader or something else.
- Why: The reason you trade with a particular method of analysis or strategy.
- How: How you manage Money Management to minimize risk.
You can answer each of the questions according to the system trading used.
Start by Observing the Market in the Early 15 Minutes
In the initial 15 minutes when a market session starts, usually the price will occur quite high volatility.
This will make it difficult for you to analyze, especially for Price Action traders.
So, what must be done in this Day Trading rule is to wait until the market sentiment determines its attitude.
After 15 minutes have passed, you can start looking for opportunities based on a predetermined trading setup.
If you are more guided by technical analysis, then look for trading opportunities based on the latest technical outlook.
If you rely on a news release, don’t be reckless to enter the market before or just when the news is published.
Preferably, wait a few minutes for the market to digest the news, then specify an entry based on the most ideal price situation.
Reviewing for every trading
This rule is often overlooked by novice traders, even though the benefits are very important.
There are always lessons that can be obtained from each end of the trading session.
Therefore, always take the time to identify the success or failure that you have obtained after closing a trading session.
If necessary, make a forex trading journal, and write whatever open position has been done.
Fill in the journal with day/date, time of entry, time of exit, pair, price of entry, SL, TP, Lot, and additional notes for evaluation.
By doing a review, you will be able to correct every step that is applied in the next trading opportunity.
Use Stop Loss
The next rules are wise in using Stop Loss.
Did you know that the desire to stay in a floating loss position can lead to greater losses and potentially destroy your account?
Stop Loss can be a savior in critical conditions.
That is, trading without using Stop Loss is a fatal error that must be completely avoided.
To determine Stop Loss is to place it below the closest support level for long positions, or above the closest resistance level for short positions.
Use a Limit Entry Order in Certain Conditions
Do you often close orders too early before a trend ends?
This has the potential to reduce the profit obtained.
This is what traders usually do when Open Position using the usual method or Market Order.
Therefore, you can try to enter the market with an alternative entry method, including Limit Entry Order and Stop Entry Order.
This rule allows you to enter the market in an unusual way.
Be Selective in Choosing the Best Trading
Selective is the main key to the rules before you actually enter a market.
Make sure there are always strong reasons why you choose to enter a particular market and avoid others.
For example, you prefer to enter the European market session because the level of volatility at that time was high.
Markets tend to be more liquid and form a clear Uptrend and Downtrend pattern, so it will be easier for you to read price movements and try to make a profit.
Take Control of Yourself, Don’t Be Too Ambitious to Chase the Market!
The ninth rule is being able to control yourself when entering the trading market.
When the market looks less friendly and is not in line with the analysis or trading system used, do not be desperate to pursue it.
Know that the market moves without anyone who can manage it. That is, you cannot control the market to move as you wish.
When in doubt, reduce trading volume.
When a sense of doubt surrounds the mind, it can have fatal consequences for every decision taken.
Therefore, anticipate by reducing the volume or lot you are trading when the doubt arises.
Usually, this doubt arises after a trader has suffered a significant loss.
A sense of worry and anxiety enveloped their minds, was the trading system used correctly?
Will the price really move according to the trend? All of that will trigger severe stress to cause frustration.
Accept Loss with sincerity
Sometimes you might expect to be able to profit every day.
But when the profits don’t come, or you experience a very unlucky day without profit at all (even minus), you must accept it sincerely.
This is the most crucial Day Trading rule.
Accept the loss and immediately move on.
Don’t let you refuse to admit defeat, because this will trigger a sense of revenge.
This kind of trader will usually try to overtrade.
Even though traders who are stuck with this kind of greed usually end up with losses on the next trade.
Day traders can make a trader to success, but to make this job requires expertise that is above average so that a trader is able to trade for a living.
Reading all trading tips and applying them with discipline makes the door to success easier for you to open.
If you have really mastered day trader strategy, you can use the TenkoFX broker service