Foreign currency trading is a business with a lot of risk and a lot of reward. You need to come up with plans if you want to keep making money in the market. Keep in mind that day trading in foreign currency is not the best way if you want to think about things in the long run.
The idea behind day trading in foreign exchange is the same as day trading in the stock market. You bet on the short-term price changes of the different currencies in your portfolio. So, you either make money or lose money depending on how the prices of these currencies change during the day. Whether you are long or short at a certain point in the day depends on how likely you think it is that prices will change later in the day. Let us explain by a simple example. Let's say you are short Yen in the morning trading session (meaning that you have sold yen at a price). It means that you expect the value of the yen to go down more during the day so that you can buy it back at a lower price and make money. You are taking a negative view of the market here.
On the other hand, if you are long on Yen, which means you have bought Yen at a certain price, it means you are bullish on Yen and think it will continue to rise so you can sell it at a higher price and make money. So, day trading foreign currency means looking at the market in a very short-term way, which is risky and could lead to huge capital losses.
Always think about the long term, but especially on the foreign currency market, which is very volatile. This way, you don't have to depend on day-to-day shocks, and you can expect your capital to grow over time. Look at the economy, inflation, and the policies of the country's central bank, and then make a decision based on that information. Don't worry about short-term changes. A lot of traders who bet on day trading foreign currency have lost a lot of money. If you have a very short time horizon, there is still no foolproof strategy that can protect you from losses.
If you want to start day trading, you should start with smaller bets so you can get a feel for the market. Keep your bets small and get out of the game as soon as you can. Don't forget to set a stop loss position if you want to avoid chaos and get out when it's best. Day trading foreign currency is a risky business, and there are better ways to make money.
Remember that Rome wasn't built in a day when you hear about people who say they made a lot of money trading currencies every day. It takes time to become wealthy. Never let your greed get the best of you.
