Forex day trading explained

Forxe day trading is the buying and selling of securities, but only within that same trading day. Day trading can take place in any market but is commonly referred to in the context of either the Forex trading market or stock trading market. In order to be successful as a Forex day trader, you need to have good capital and a good amount of knowledge of the market behind you. However, having this doesn't necessarily guarantee success. This is especially true when 'invisible hands' are working and prices fluctuate enormously during intra day Forex trading. The phenomena, which is used by Forex day traders, involves leveraging their capital in order to acquire an asset and then getting rid of it as soon as the asset's price changes in a favourable direction. What day traders usually look for is a stock or a currency which is highly liquid. Curious about the best Forex pairs for day trading? Majors are often viewed as the best choice, as they have the highest Forex trading volume. During Forex day trading, especially for beginners, it is advised to focus on the EUR/USD currency pair, as this pair usually has the most favourable trading conditions and also the price of it fluctuates a lot.

What is Forex day trading?

Forex day trading is usually used in order to eliminate the need to pay fees for keeping a position overnight. These fees are referred to as Swaps. In some cases, the Swaps could be positive, and a strategy based on acquiring assets with positive Swaps is referred to as Carry Trade, however this strategy is beyond the scope of this article.

Day traders hold a lot of importance for the Forex market. Day trading Forex is a highly speculative activity, yet it keeps the market in running smoothly. Forex day traders are the ones who provide the market with liquidity.

How to day trade in Forex

Day trading for most people is not as it is portrayed in the media. It is not the get-rich-quick scheme it is often shown to be. Step into the world of day trading and then you will see how this world is from the inside. The guide to profitable Forex day trading could be considered controversial, as it is something that everyone has an opinion about. What everyone agrees on however, is that it is a very risky activity and should only be considered if one has an in-depth knowledge of the market and a clear understanding of those risks.

A successful day trader or more of a professional day trader will have the following qualities:

Capital requirement

A large amount of capital at the trader's disposal with an adequate risk/reward ratio is definitely needed. Even though day traders are looking for more return than average size traders, it is still recommended to keep the trade size reasonably low.

Market knowledge

A complete knowledge of how the market works and what the main determining factors of market moves are is vital. A successful day trader needs to keep an eye on both fundamental and technical indicators.

Extraordinary discipline

In every part of life discipline is important, but neglecting discipline in day trading may result in huge losses. Success without discipline is practically impossible. You need to be able to monitor prices for periods of time without making any rash trading decisions. This is hard and requires lots of discipline. Sometimes seeing profitable market moves that you have predicted, but did not execute is painful, yet you it is better to waste an opportunity than guarantee a loss.


One has to adopt one or many strategies in order to minimise losses and maximise profits. As market conditions vary from day to day, so should a day trader's strategy. A successful day trader has to come up with a new strategy almost every other day or at least adjust his existing strategy to the new market conditions. In order to day trade Forex successfully, a creative mind is needed.

How to day trade in Forex for beginners

The first step in becoming a successful day trader in the Forex market is simple and it is not much different to other trading strategies. As a beginner, it is advised to practice day trading with virtual money on a demo account in order to get a feel for how Forex day trading works before committing to real money Forex trading. This may sound too simple, but it is vital.

Another important point for day trading is to choose a good Forex broker. The main attribute here is the spread and the commissions you have to pay. As a rule, a day trader executes a few transactions every day and the cheaper this is for you, the more benefits you can get from day trading. Before choosing a brokerage firm, research their offers and track all of the possible expenses associated with day trading. You may also request a bonus to get the best deal for your deposit. At Admiral Markets, we supply market leading spreads together with low commissions. All of our trading accounts are perfectly suitable for day trading.

The possibility of losing your investment is high, so it is advisable to only use risk capital (money that you can afford to lose) when engaging in Forex trading.

The Forex market offers high levels of leverage to traders. Leverage has both the possibility of high returns and high losses and should only be used with discretion. Be disciplined and don't be tempted to overtrade.

Becoming a successful Forex trader requires a good understanding of charts and how they work. You must also define your trading strategies and stick to them.

Like any other investment activity, trading in Forex involves a lot of risks and proper money management principles should be employed when undertaking it.

Although anyone can trade in Forex, it is definitely not for everyone. You need to have an appetite for and an understanding of the risks and technicalities involved.

How can you learn Forex day trading?

The best and the most effective way to learn Forex trading is to practice it on a daily basis. The first step is of course to pick up the most suitable trading strategy. The most common strategies for Forex day trading are scalping and breakout trading. While the first strategy involves a lot of positions opened at Minute 1 charts, it mainly concentrates on getting less than 10 pips of gain per trade, while keeping your stop-losses at nearly the same level. If you do not know what the PIP is, we'll outline it below:

(Percentage in Points): This is the smallest change in price for any currency pair. Except for the Japanese yen and a few other currencies. The pairs are mostly shown with five decimal places. The fourth decimal point in a price quote is called a 'pip', while the fifth is referred to as a 'nano pip'.

If the GBP/USD pair for example changes from 1.4558 to 1.4559, the difference is (1.4559-1.4558) =0.0001. The price would be said to have increased by 1 pips.

This is quite a nice strategy for traders that have a lot of time at their disposal.

Trading breakouts can be a great day trading strategy too. With this strategy you are patiently waiting for big market moves, usually caused by the various changes in the relevant country's economies. Such changes are delivered either unexpectedly or via expected news releases. During breakout trading, a trader opens a position in the forecasted direction and waits for the currency pair to escalate (or slump) by a large amount of pips.

This is an efficient trading strategy for those who keep up with economic and political events, but who cannot devote enough attention to the markets on an hourly basis. A trader will generally execute far fewer trades with the breakout strategy, especially when compared to a Forex scalping strategy. Nevertheless, this is a great strategy to consider and try out.


Some may argue that Forex day trading is a field that should be left for the people that have great experience and can get fully immersed in the activity. Others say that day trading is the best way to make money in the least possible time and thus is the best type of trading. Whatever the case is, day trading is the field in which both pros and cons occur. While this type of trading is gaining popularity with each passing day, it is only effective for the people who are eager to commit a lot in order to succeed at it.

Most of retail Forex traders are in fact day traders, and such traders do generate the highest volumes. Becoming a day trader is an extensive process and once you commit to it, you will have to go through a lot of trial and error. Your discipline, stress resistance and your confidence in your skills will be put to the test, but once you become successful in day trading, you will be able to enjoy the fruits it brings. If you are ready and understand the risks, apply for a live account with Admiral Markets and see what day trading is all about.