In the last decade, currency trading has become very popular with retail investors and traders. Currency trading is done online by millions of people around the world now. There are many ways to operate in the forex market.
A very popular method of trading currencies is to hold intraday positions. This is also known as day trading. There are millions of daily traders around the world who make a living from currency trading on a daily basis. Holding intraday positions means that you are going to open a trade and then close it at the end of the day.
Intraday trading requires the use of M5, M15, M30 and M60 charts to find high probability trade setups. M5, M15, M30, and M60 mean 5-minute, 15-minute, 30-minute, and 60-minute time period charts. These are also known as intraday charts.
Trading intraday charts takes some practice as these are fast moving time periods. You will get a lot of signals on these intraday charts. The trick is to filter out the false signals using confluence. You will see in the lower time periods, there is more noise compared to the higher time periods. Noise means there will be false trading signals.
As an intraday trader, you will need to develop a system that filters out false signals. The best system to filter false signals is to use confluence, which means that once you get a trading signal, you look for confirmation with another indicator and only enter a trade once you find confirmation.
What attracts most people to intraday trading is that the required stop loss on most exchanges is small and does not exceed 20-30 pips compared to trading on the daily charts, where you may require a stop loss. much higher. Another thing that attracts traders to hold intraday positions is that positions are not held overnight.
What this means is that every night you can have a deep sleep since you have closed all the positions that you opened during the day. Every day you will start over. Open a position when there is a high probability trade setup and close those positions at the end of the day.
The downsides to holding intraday positions is that you will have to monitor that market during the day to find high probability trade setups. This requires sitting at the computer for hours at times. One of the most popular intraday trading strategies is to scalp the market.
Scalping involves quickly entering and exiting the market and getting a few pips each time. Each scalp trade on average makes 10-20 pips. There are intraday trades that only focus on scalping, as the trade does not last more than 1 to 2 hours in most cases. It can even become profitable in minutes!