Day trading currencies

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  • Well regulated
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  • CFD and Binary Options
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Day trading is a way to earn money by buying and selling different assets during the same day. A day trader will normally not have any open position over night. He will close them before the market closes or before he ends his work day. Day traders will often take positions that they close a few minutes or seconds after they oppened them. The goal of these very short positions is to profit from the small market movements that takes places on the market all the time. The value of a stock or a currency will go up and down thousands of times during any given day. Each of these small movements presents an oppertunity for a day trader to make a profit. Read more about how do day trading work?

forexDay trading can be very profitable but requires a lot of skill and discipline. New traders should always use a trading simulator to learn how to trade. Becoming a day trader that makes money is not very hard, and most people can become one. With that said. Most people who try day trading end up losing money because they are not willing to devote the time, will and discipline required to become a successful trader. Do not try to become a day trader unless you are willing to do what it takes to become a successful trader.

Why currencies?

The most popular type of asset to day trade is currencies (including cryptocurrencies). There are however day traders who trade stock, bonds, options, commodities etc. as well. You can day trade any type of asset that is liquid and that has enough volatility to make it possible to find good trades. Most traders focus on a single currency pair, a single stock or a single commodity. A skilled trader can focus on a low number of different assets.

The main reason that currencies (FOREX) trading are the most popular type of trading among day traders is that the FOREX market is extremely liquid and contains a suitable balance between volatility and stability. Currencies are always moving up and down in value in comparison to each other but substantial rapid changes are very uncommon.

Different currency pairs offer different volatility, and each trader can choose a currency pair that suits their prefered volatility.

Another reason that currencies are popular among day traders is the fact that it is possible to assume margin position with very high leverage. Many brokers offer x250 or even higher leverage?

Cryptocurrencies

vCryptocurrencies have lately become increasingly more popular among day traders. Cryptocurrencies offer a liquid market and very high volatility. This makes them ideal for traders who are willing to make high-risk trades that can net them massive profits.

Most moderate day traders stay away from cryptocurrencies due to their volatility and because they can be hard to analyse. Psychology and hope can have a large impact on the market value of cryptocurrencies.

The most popular cryptocurrencies to day trade with are Bitcoin and Etherum.

Financial instruments

Day traders only seldom buy the asset they trade in directly. To be able to do so and still earn a reasonable return that you can live on requires that you are able to invest large amounts of money. Most day traders do not have enough money to do this.

By trading with leveraged financial instruments such as binary options and CFD:s a day trader is able to earn enough money to be able to make a living without having to invest vast sums of money. Binary options and CFD:s makes it possible for a day trader to earn the same profit as a trader that invest 100 times more directly in the asset.

CFD

A CFD, Contract For Difference, is a type of financial instrument. A CFD is always based on an underlying publicly traded asset. It is the market value of this underlying asset that governs the value of the CFD.

demo accountA CFD allows you to buy the potential profit and loss generated from the underlying asset. You never own the underlying asset. The main benefit of buying a CFD instead of the asset directly is that most CFDs are leveraged. IE buying a CFD for USD 100 allows you to make (or lose) more money then you could make investing USD 100 in the asset. The leverage of a CFD can be as high as x250 or sometimes even higher. A CFD with x250 leverage allows you to earn x250 more than you would investing the same sum in the asset directly. If the asset increase 1% in value the CFD would increase 250% in value. If the asset loses 1% in value the CFD would lose 250% in value, IE more than you invested.

It is important to know that you can lose more money than you invested when you trade CFDs. You are legally required to cover all lose. This is true even if you do not have enough money to do so in your investment account.

Binary options

Binary options is a financial instrument that allows you to earn a fixed return. The options will always give the same return if they mature in the money. If the option matures outside the money then the option is worthless and you lost your investment. The fixed return is usually very high. Several brokers offer options with a 91% return. Many binary options have very short maturity time. A few hours down to a few seconds. This allows the day trader to earn a lot of money in a short amount of time.

All binary options are based on an underlying asset such as a currency, a stock, or a commodity. It is the market value of the underlying asset that governs whether an option matures in the money or not. You can read more about how binary options work here.