You have probably read about the astronomical amount a professional trader makes. But the reality is quite different. The dream earning is possible but requires a lot of hard work and perseverance. Events affecting the global money market occur unexpectedly and the day trader lives on the edge and always is on high alert looking for ways to cut loss or find the right trading opportunity. A typical day in the life of a successful forex trader can be –
This is tricky as depending on your time zone and the markets you want to access day trading might not allow much sleep time. This may sound cliché but for a forex day trader, whether you’re trading bitcoin or other currencies, you have to start early.
Since you are working from home, you can do what you want. There are no office protocols or dress codes. You must induce a certain discipline so that you can be mentally and physically prepare yourself for the day ahead. Remember that the job requires utmost concentration and alertness.
Give yourself at least an hour to mentally tune yourself before you start trading.
Here are some points to ponder –
- Go through the news since the last time you exited the market. Check the economic news especially.
- Rehearse your strategies. If you are having a specific trading-related issue then make a plan to handle them.
- Check your trading account balance. You should know how much you can risk on each trade. (we recommend risking 2% or less of your account balance and 1% if you are a newbie)
- Make sure your trading platform is working well, and there are no network issues.
Capitalizing the trading times
The hour before and the first few hours after ‘market’ opening offer the best trading opportunities. If you are staying in the eastern time zone, you must be ready at your computer by 8:30 AM. If you want to trade in £ or € then you have to start a couple of hours early. Remember that a couple of hours in the morning is generally one of the most volatile and highly liquid of the day.
In an active market, you can opt to trade until 11:30 AM EST, when the volatility tends to decrease as “lunch hour” begins. Resume trading between 2:00 and 4:00 PM EST. The last hour is the second most volatile hour of the day and is a popular time for day traders.
There is a misconception that you have to work more to make more but in reality “less is more”. There is another misconception that day trading is hectic with a constant adrenaline rush. If you are trading like this then there is something wrong. It may be that you are not prepared for the change in the market situation or you are risking too much of your money or you don’t have a proper trading plan. You need to focus on finding opportunities, execute the trade and then manage the trades according to your trading plan.
Reviewing the trades
Your work is not over if when the trading day ends. You need to review your trading throughout the day. An easy option is to take a screenshot/print of your chart for the day and mark the trade levels, profits and losses for each trade. You have totake note of the following –
- No of hours traded
- Number of trades
- Number of winning trades
- All the winning trades you have done in pips/points/cents
- Number of losing trades
- The whole amount of all the trades you have lost in pips/points/cents
- Net profit or loss of the day in pips/points/cents
- Your mental state/trading psychology and if there was a change during any trade
Save each screenshot with the date in a folder so that you can review it later. Make a habit of going through the week’s trade each weekend. You need to note your lacking or mistakes as well as triumphs. At the end of the month review the notes of the entire month. Note the improvements and what still needs improvement.
Day trading isn’t a cakewalk but it isn’t hard labor either. You need to know what want to achieve and more importantly need a plan to go there. Focus and patience are the keywords in the business. Most traders find the job interesting and if you plan your targets and trade well you can also find ample time to pursue other interests. You should practice and prepare yourself for quite a few months before opening a live account and expect to make a consistent income.