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Currency Day Trading – Do’s and Don’ts

The statement, “The marketplace isn’t what it used to be,” could arguably be described as the understatement of the year.  There have been so many changes in a debt-ridden Europe and questionable leadership tactics here at home that the stock market is behaving more like a bi-polar schizophrenic than a collection of the world’s best financial minds.  Several sectors have been hit hard by the rampant economic swings; none more so than the currency trade.  This corner of the financial system has always been slightly more volatile than the rest of the market; thus individuals and companies involved in currency day trading need to exercise extreme caution in order to survive the modern marketplace.

Psychological Effects on Currency Day Trading

Like it or not, human emotions can, and will, interfere with trading decisions.  The best laid plans are all for naught if the investor panics during a slight market downturn and abandons his principles.  Such actions over a whole market section can spread like a contagion and ultimately result in devastating consequences.  Various emotional states impact cognitive performance, mainly decision-making processes, and influence the financial fight-or-flight response.  To combat this natural risk-aversion in currency day trading, be aware of world news and how similar happenings have previously affected the market.  Perform an adequate amount of research and formulate a plan with clear boundaries that will limit the impact of irrational mannerisms.  Most importantly, you must stick with the strategy you begin with; changing plans multiple times within a currency day trading slot will result in utter confusion and cause all your hard work to become null and void.

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Currency Day Trading News

As previously mentioned, a well-thought out plan is crucial for currency day trading success.  In order to formulate a plan that is based on real-world intelligence, an investor must stay in the know.  There are several ways to obtain information related to the currency market – many of them free.  Utilize trading calendars that allow the user to filter out information on unwanted currency pairs, so that you may concentrate only in the areas in which you will be trading.  Don’t discount the effects of information overload; get as much data as you need, only in the areas that are relevant to you and your currency day trading strategy.

Scheduled Breaks

Yes, it sounds crazy given that currency day trading is such an insane market sector, but taking a break from the computer is vital to trading success.  The lunacy that surrounds the FOREX market is precisely why investors need to take periodic respites from the trading floors.  Walking away for a few minutes at a time will allow the trader to regain focus and composure, thus combating the natural responses associated with stressful situations.  Stress can tip anyone to their breaking point, so be sure to take a few minutes every hour, or after every few trades, to rest the mind and stimulate the body.  Not only does this help to maintain mental stability, it gives the investor an opportunity to review his situation and determine if the trades in which he is involved are in line with his original currency day trading blueprint.

 

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