Forex Day Trading Systems, Strategies and Tips

There are hundreds of Forex day trading systems available online. At first glance, all these systems appear effective, especially with the generous praise from their developers. But as you begin to dig a bit deeper, you soon realize that day trading is fairly complex and calls for somewhat advanced levels of skill and expertise. So, how do you choose the Forex day trade system that will work for you from day one? Today we explore the foundational principles of day trading systems, get a closer look at some of the most popular approaches, as well as cover all the Forex day trading tips that will come in handy in your trading career.

What is Forex Day Trading

Let’s start at the very beginning—what is day Forex system trading or intraday trading? All the traders on Forex, or any other market, generally divide into two categories: those who are looking to benefit over the long term, for instance, several months, and those who only wish to secure the gains off immediate price fluctuations. As you might have guessed, traders who focus on short-term gains are nearly always implementing Forex day trading systems.

During intraday trading, all positions will open and close within one trading day, hence the name. This approach to trading is intensely fast-paced, which can make it more stressful and risky. However, while long-term strategy followers think that focusing on a daily chart is a waste of time, thousands of success stories prove otherwise. Once you commit to putting in the time and effort to really comprehend day trading techniques, you will unlock limitless opportunities and solutions. After all, how much does it matter how you got to the top when you are standing on the summit? Besides, the Forex day trading systems also come with a highly unique set of benefits that’ll add extra value to your every victory.

The Benefits of Forex Day Trading

An experienced position trader might ask: but how much can the best Forex day trading system possibly make you? And while the numerical indications of day trading can seem less appealing than the rewards of long-term traders, there are some distinct advantages to choosing intraday systems over any other ones.

• Any available day trading system Forex will require you to stay away from keeping your positions open overnight, and the reason is—swaps. Swap is an interest fee charged to your account as one trading day rolls into another. The structure of modern online trading requires brokers to instantaneously close and reopen any position that has to stay on for more than 24 hours. Although this process is very fast, it still takes a few moments due to the volume of orders to process. Since the price might change during the swap, the difference will either be added to or subtracted from the trader’s account. Day traders cannot afford to pay swaps and therefore contain all their trades within one day, saving themselves funds and nerves.
• Day traders are also very flexible. The market, as you may know, can change the direction several times an hour, let alone a day. Because the Forex day trading systems call for quick trades, their course can be adjusted in a matter of seconds to match the current trend. Such flexibility allows day traders to benefit on multiple levels, as well as observe a bigger picture at the same time by comparing the number of positions opened in each direction. Additionally, the more you trade, the higher is your trading profile, which is always an asset on its own.
• Finally, the day Forex system trading is about opening small positions but no necessarily getting some return. Provided you structure your trades correctly, and consider using leverage every once in a while, you will be able to compete with larger-scale traders in terms of your income. Please note, however, that using leverage implies escalated caution and consideration since the risk is elevated in proportion with the potential reward.

Now, as you have the general understanding of the Forex day trade system concept, let’s get more specific and move to finding out what makes day trading effective and what are some of the best day strategies you can implement.

Forex Day Trading Systems

Every trading system, or philosophy, if you will, is based on a set of exact principles. For example, when a position trader goes long, they base their decision on the idea that the value of any asset will eventually rise, due to a variety of factors such as economic progress. Similarly, anyone implementing a Forex day trade system has a certain image in mind that helps to structure the trading process and make fast choices. Consequently, to grow into a good day trader, you need to become comfortable with the basic aspects of the intraday trading model.

A Background of the Forex Day Trading System

To get the most out of Forex trading tip of the day, you should first take some time to fully understand why this approach to currency trading is so popular. The short answer is—because it just works. The slightly longer answer has to do with decades of market observations and experiments.

Perhaps, the most straightforward way to explain the foundation of any Forex day trade system is the ability to see the order in chaotic charts. An experienced trader will confirm that the market appears random only at first. The more time you spend in front of the graph, the better you will get at noticing similarities, patterns, characteristics, and so on. This way, day trading is largely based on two principles: the price will always fluctuate, and it will do so according to specific laws of the market.

Technical analysis is the most common way to attempt price prediction on Forex. Compared to the fundamental analysis, where the contributing factors are usually grand and often not directly related to the currency exchange, technical analytics are purely numerical. It’s basically just math. Try this: open any chart and watch the price for a bit. After some time, you will begin to pick up on a few things, such as the overall movement of the chart formation, the amplitude at which the price fluctuates, and whether there is a distinct limit corridor which the price doesn’t cross in either direction.

This is the basic technical analysis. By knowing that the current trend is upward, for example, and the price seems to repeatedly bounce off certain invisible lines on the graph,  you could wait for the price to reach the bottom and then open a long position for as long as you think it will take to reach the top of the imaginary corridor. This technique is called support and resistance trading that bases on the idea of a constant balance between the buyers and the sellers, or the bulls and the bears, at the market. For as long as the buying-selling tug of war continues, the market will go on, and the day traders will keep getting a terurn.

However, you will also quickly notice that the upcoming up and down price movements are not always obvious and sometimes not balanced out. This happens when the market is in a powerful trend, and the other side doesn’t have enough force to reverse it. At this point, you might want to step aside from looking at the chart as a whole and zoom into the specific formations at the critical segments of the graph. As you do that, you will notice very particular combinations of candles or bars, which can tell you what is likely to happen next.

Forex Day Trading Candlestick Patterns

We won’t go too deep into describing all possible candle combinations that can be used for day Forex system trading—there are just too many. For now, a basic logic behind looking for patterns will do. You might already know that every chart element is a visual representation of all key points of the specific time at the market. For instance, on a daily candlestick chart, each bar is going to contain four prices: the open, the close, the high, and the low. Judging from the numbers, you will be able to tell how the market was feeling at that moment.

The next step is to compare the indications of two or more candles located near each other. More often than not, two or more candles form a figure that falls under recognizable chart patterns. Using your existing knowledge or quickly looking up certain formations can help you make the next decision more quickly and effectively. For instance, when you see Three Bullish Soldiers—three green candles appearing one higher than the other—you can be sure that the next couple of candles will form in the same direction. And for a day trader, that’s more than enough. Now that you understand the rudimentary principles of a day trading system Forex, let’s also discuss two main drivers behind Forex day trading system`s earnings potential.

How Do Forex Day Traders Capitalize

All online currency traders attain yield in the same way: from the difference in values of certain instruments. But while the overall goal is essentially unvarying, the ways to get to it range from one trading approach to another. Depending on the style you pursue, you will pay extra attention to very specific factors and indications. For day traders, in particular, these key factors are liquidity and volatility.

• Liquidity is a direct reflection of how popular a currency pair is. The best Forex day trading system will always account for such popularity because the opportunity to quickly process any transaction is vital for short term traders. Based on liquidity indications, all currency pairs are divided into three groups: major, minor, and exotic. This division is linked to many contributing factors, for instance, politics and global economic trends. However, for a day trader, the reason why a certain currency pair is more popular than the other is not as relevant. All that matters is how fast and with what yield they will be able to generate a trade. Think of it this way, if you are in LA in July, would it be easier to sell a swimsuit or a fur coat? Now, this won’t mean you will never be able to sell winter clothes in the city of angels, just that it will probably take more time and effort—both of which are opposite from fast and nearly effortless day trading.

• Volatility translates into how drastically does the price change for a given pair. Usually, volatility derives from liquidity combines with volume: the popularity of the instrument mixed with a sheer amount of traders. The trick at this point is the fact that the price formation is a battle between bulls and bears, the buyers and the sellers. Since you can successfully benefit from both purchasing and selling on Forex, the balance between the sides is constantly shaken by pushes in either direction. For long term traders, these frantic movements pose a bit of a threat since an unpredicted activity against their bet can trigger an automatic order or reverse an overall trend. But for anyone following Forex trading tips for the day, volatility is bread and butter.

Why Do You Need a Day Trading Strategy

The theory is more or less covered. Let’s get technical. Once you are set on the idea of benefiting from day trading, you need an action plan. Also referred to as strategy, method, or system, this arrangement of everything you are going to do will answer three crucial questions: why, how, and when.

Why is your foundation for opening a position in a specific direction. Most Forex day trading tips suggest trusting this entirely to the technical analysis indications. While long-term traders cannot disregard the significance of fundamental factors, for short-term traders, strictly numerical data is more than enough. Now, which data you will gather and how you will interpret it is a matter of trading strategies. For example, you might apply a Fibonacci sequence and direct your trades from certain levels on the chart. Or you could wait for candlestick formations to make a move—whatever you do, you always need to have a reason.

Then you zoom in closer and decide on the size of your trade, as well as on other additional factors. These may include establishing your risk limits, setting up automatic orders, installing the necessary technical indicators, and so on. At this point, your accuracy and determination make or break the outcome of an entire trading session. Mistakes cost quite a bit. But, don’t worry if you aren’t getting it right early on, as there is always room for improvements and adjustments. Make sure to keep coming back the next day and tweaking the trade parameters until you are satisfied with the results. 

The ‘when’ part of strategizing might vary depending on the particular technique, but it is still essential to keep it on the radar. For some traders, the time of the trade is defined by the previously described ‘why’ factors. This way, you’ll open a position as soon as a specific pattern shapes or as the price hits a certain level. Others would focus on timing from the perspective of the volume and only enter the market when there are the most participants. From that angle, some would only start trading at the beginning of their region-related market hours, others would wait until after lunchtime, and the rest will aim towards the evening. As you learn more about different Forex day trading systems, you’ll discover the unique advantages of trading within distinct time ranges suggested by the method you picked.

Without getting the why, the how, and the when out of your way, your trading journey will pretty much turn into a guessing game. And so far, there hasn’t been a single successful Forex trader who just lucky-guessed their way to the top.

The Best Forex Day Trading Systems

Despite the escalated risk levels and advanced decision-making speed, the Forex day trade system followers are the largest group on the market. It’s pretty self-explanatory—anyone would be excited to see quick results without spending hours analyzing the market. Such popularity of the approach resulted in literally thousands of available strategies, with new ones arriving each day. However, if we look past the exact specifications, we can outline the general ideas that lead to a certain take on trading idea formation. Below we will talk about three major streams in Forex day trading systems: scalping, reverse trading, and momentum trading.

Scalping

Scalping is perhaps the most widely recognized day trading system. The general idea behind this method is to benefit from micro-movements in price formation. Scalping is extremely dependant on current trends and almost never allows trading against them. Despite the rather basic foundation, scalping strategies might not be the easiest out there. The main idea is to achieve as many small victories as possible to later have them add up into a significant amount. So, as you might have guessed, this method might be pretty nerve-wracking, especially at the beginning. The crucial trick to mastering scalping is working out an optimal risk to reward ratio and arranging the trading process accordingly. Professional traders say that advanced scalping is like operating a futuristic vehicle: there are just so many things to consider and buttons to push. However, as soon as you obtain the skill of effective Forex scalping, you should be able to achieve very noticeable results.

Reverse Trading

Reverse Forex day trading systems are also known as fading, counter-trend, or pull-back strategies. Despite the naming, the main idea isn’t always to go against the stream but rather to address the current trends a bit differently. Reverse trading involves placing the trades against an ongoing trend in order to benefit from the expected reversal. The circumstances for any fading strategy need to be one of the following: the pair is either overbought or oversold, the early sellers or early buyers are about to collect their returns, either the current holders or the short-sellers are facing high levels of potential risk. To tame the risk in fading,  consider setting up automated orders such as stop loss and take profit. This will prevent you from being carried away by a newly generating trend that began after the reversal.

Momentum Trading

Momentum day Forex system trading is a notch more complex and usually linked to some fundamental aspects. Basically, the traders who use momentum strategies anticipate a generous momentum level to follow a specific event, news release, or announcement. Such an approach is considered partially intuitive as there is never a way to know for sure how the trading community will react, despite the predictions and historical data. Consequently, the key to successful momentum trading is undivided focus: keep your eyes on the chart and ensure to plan exits for both positive and negative scenarios. The best advice to come out a winner of any day trading situation in general, and momentum trading in particular, is to remain patient, cold-hearted, and rational.

What is the Best Forex Day Trading System for You

Think it would be hard to pick a true gem from the vast pool of Forex day trading systems? Well, yes and no. Yes, because there are really a lot of options out there and it’s impossible to tell good from bad unless you try them one by one. And it goes without saying that exploring every available method can be very time consing, if not downright impossible. But, there’s good news as well. You can speed up the process of choosing the best Forex day trading system by establishing what kind of trader you are.

Take a moment and picture how you will approach trading on a daily basis. Namely, establish how much time and finances you can afford to spend. For some, Forex is a full-time job, while others can only contribute an hour or two. Both are ok since there is a solution for everyone. Of course, you shouldn’t expect to make as much as someone who spends fifty hours a week looking at the chart, when you only spend about ten, but you can still make some extra cash, which will never hurt.

Then set risk-taking boundaries to narrow down your search even further. At this point, it all goes down to your preferences, beliefs, and stress-resistance levels. While high risks often bring higher rewards, going against your gut and putting yourself through misery each time you open a position is just not worth it. As already mentioned, there is a way to benefit from day trading system Forex techniques for anyone who is committed to finding it.

Finally, evaluate the amount of knowledge you already have on the matters of Forex day trading and set the goals on obtaining new information and learning new skills. Constantly taking your trading to the next level is only possible through continuous education. So, while discovering fresh perspectives is not technically part of trading, you should contribute a good deal of your time to studying the market.

Forex Day Trading Tips

A great way to structure your day trading process, especially if you don’t have a lot of time for research, is to follow Forex trading tips of the day provided by your broker. Provided you went with a reputable brokerage, they will very likely have a team of market analysts that share their insights and provide valuable suggestions for the central trading instruments.

At the very beginning of your trading journey, these Forex trading tips can come in very handy. Since you are just starting to navigate your way through the market and get used to the unique nature of day trade systems, having a source of reliable market data will work as a lighthouse on the horizon of your success. And once you get more comfortable with analyzing the market on your own, you can come back to the Forex trading tip of the day section whenever you want to confirm your theory or get a second opinion.

Head to the Forex trading tips of the day page now and check out all the opportunities you can seize today. Don’t want to contribute actual funds into trying out new things? Then, consider opening a demo account for working out the kinks of the Forex day trade system.

Risk-Free Day Trading With A Demo Account

Demo accounts for Forex trading are perfect for both the newbies and the trading professionals. The practice account is an exact copy of the live one, except the trades you open here are simulated. This simulation can be your safe space for getting to know all of the complex aspects of currency trading at your own pace.

Since demo trading doesn’t have any effect on the actual market, the capital you use within it is also virtual. Plus, with the right broker, opening an account is free, so you don’t have to spend a single penny to start training. This also means that demo is a risk-free way to experiment with the complexity of Forex day trading systems and techniques.

A demo account can serve as a great confidence booster, especially for those who prefer to learn hands-on. Once you see the strategy working out with your own eyes and note the effect of each little tweak you had to make to get where you wanted, you will be more than ready to go on to the live market and succeed for real.

There is no downside to trading in demo because it is the best way to be creative and allow yourself to a healthy amount of mistakes. Since you are not risking any capital, go all-in with whatever you would like to try out and learn to face both the victories and setbacks from a philosophical standpoint. This will teach you to remain calm no matter what and continue thinking clearly in any type of scenario.

Forex Trading With AdroFx

AdroFx has everything you need to successfully implement any Forex day trade system. From versatile learning tools, daily market updates, and an endless stream of pro insights to a comfortable trading account selection and the most advanced trading platform.

AdroFx is a team of professionals with decades of experience in financial markets, banking, financial technologies, and a lot more. We combine the best practices of finance world leaders with sophisticated technology to deliver exceptional service to both institutional and retail clients.