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Prior to I will give you day trading basics, I would like to shed some light on what day trading is, and what it’s not. It seems like a lot of newbies assume that day trading is a strategy that employs daily charts (in which every bar or candle is one trading day). First of all, day trading isn’t a strategy. Day trading is in fact a style of trading when a trader trades within business hours solely and closes all open positions at the end of every day. In case of day trading, a trader usually does technical analysis during early morning hours, and when a new working day begins, the trader awaits a trade signal and then opens positions, which he / she will close as soon as day ends.

In FOREX daytrading, the typical day profit is approximately 60 – 120 pips, the typical day loss is between -15 and -30 pips, and the common quantity of trades is 1 for a trend strategy and around 2 – 3 in case of a flat strategy. Day traders American traders usually, get up very early in the morning before working day starts, so they could take advantage of the active European trading session, and have the required time for technical analysis; they usually close all open positions towards the end of the day with a profit or loss. If a position closes by the stop-loss, day traders seldom reenter the market the day it happens except if they are trading within a channel.

The market can be in trend or in flat the day a trader chooses to trade, in case it’s flat, the trader can make between 2 and 3 trades by 30 – 50 pips each opening positions in the direction of the middle of the channel.

All day trading strategies are similar and all day trading basics are similar. It all begins with technical analysis, then all necessary positions are opened, and by the end of the day every open position is closed with profit or loss. The real difference is simply in the way a certain trader forecasts the price movement, and what currency pairs she / he chooses. There may well also be a difference in how exactly profitable and loosing positions are closed by different traders.

Day trading differs form investing, it’s much closer to speculation. That is why day positions rarely live longer than 8 hours, and should be closed by traders earlier than working day ends. Traders need to finish every single day with a profit even when it is a negative profit. Those who open positions as day traders, sometimes keep them overnight for two main reasons. Once market goes through an significant level, or goes beyond an earlier major extremum, a new powerful trend almost always begins, meaning that it is far better not to close open positions while the new trend evolves. Trader stupidness and reckless behavior is the second reason. When a trader opens a position and the market moves against it, this trader can get rid of the stop loss order and leave the position open for several days until market turns around and this position could be closed with no loss. These traders usually lose their deposits eventually. Refrain from joining them at any cost. Accept your -20 pip loss and earn +80 pips profit following day. By doing this, you adhere to your trading system, minimize your losses and allow profit to build.

In my Day Trading Basics I also wish to touch upon a distinctive kind of daytrading strategies. To be clear, almost any strategy where a trader works within working hours of a single day and closes all positions at the end of the day may be termed as a day strategy, even if a trader makes 20 – 50 trades each day. Day strategies utilizing a large number of small transactions daily are called scalping strategies. Those who do scalping, never keep positions open more than 20 mins, and always close their positions before leaving their desks; the typical profit/loss of an typical scalping strategy is about 5 – 10 pips. Scalping needs concentration and prolonged training on practice accounts and then on mini-accounts, and it is considered to be a privilege of experienced traders. Scalping is extremely tough for normal folks and novice traders, and usually is not advised in the beginning.

To conclude the things I have just said, I wish to give you my simple yet proven daytrading strategy.

1. Tested with EURUSD currency pair, and 2% of deposit per trade (figure out lot size according to the leveraging of your account).
2. Complete technical analysis at about 7:00am EST, and find out direction the market probably will move throughout the forthcoming working hours.
3. By 8:00am it will likely be apparent where the pair starts to move to, so open a position.
4. Place your stop-loss order into the previous extremum yet not more than -30 pips. In the event volatility is elevated during the morning wait until the market breaks the channel and enter at the break point setting up stop loss order to -30 pips.
5. Set up take profit order to +120 pips that is the average daily range of EURUSD pair. In case a significant movement takes place, your big take profit order is going to be executed.
6. Hold back until market exhausts and flats out, then close your position by hand, or at the end of the day at 4:00pm EST.

Even more details on day trading basics can be found here on my website:http://www.tradingsignalsfx.com