Forex trading is becoming more popular by the day. As more people learn about forex trading, they feel inclined to try their hand at exchanging currencies. However, making successful forex trades is easier said than done. Depending on the source you use, you’ll see websites quoting that 70 to 95 percent of forex traders fail to make a profit. However, most experts unanimously agree that only 15 percent of forex traders see profits. The primary reason many forex traders fail is that they take an incorrect approach to forex trading.
The foreign exchange market is one of the largest and most valuable financial markets in the world. Its value is far higher than stock markets and commodities. According to the BIS, foreign exchange markets have a daily turnover of $6.6 trillion. Likewise, the market valuation for the global forex industry stands at approximately $2.409 quadrillion.
Hence, it’s apparent why many people are interested in getting a slice of the pie from the forex industry. However, if you want to be successful as a forex trader, you’ll need to adopt a trading plan and stick to it.
Most forex traders like to take a more long-term approach to forex trading. Statistics show that 41 percent of traders conduct between 9 and 20 trades monthly. Likewise, 35 percent conduct 4 to 8 trades monthly. However, 14 percent of traders execute more than 20 monthly trades.
Some forex traders abide by the belief that you should be trading daily. These are usually known as day traders. Day trading in forex can be tricky. However, if you know what you’re doing, it can also be very profitable. Making daily small profits can help you gather a significant chunk of change at the end of each month.
Alongside day trading, forex scalping is also a viable strategy that many traders adopt. Let’s explore both these strategies in detail.
The Daily Income Strategy in Forex Trading
Most daily income strategies in forex trading revolve around high-volume trading. Two approaches facilitate a daily income strategy. They include:
Day traders usually close their position before the market closes. They don’t wish to hold their position overnight. Therefore, their trade times are very short, usually ranging from a few minutes to a few hours. There are various advantages to day trading. For instance, day traders hold a median risk-to-reward ratio because they close their positions when the market closes. Likewise, it also provides them substantial trading opportunities. Since day traders don’t commit to any position for a long time, they can freely exchange currencies multiple times a day. However, day trading can also be very time-consuming. You’ll have to invest significant time daily to observe market trends. Moreover, you’ll have to stick to your screen to identify any opportunities that arise. In addition, day trading can also be challenging for beginners because it requires significant technical analysis skills.
Forex Scalping Strategy
Forex scalping is another strategy that focuses on short-term profits. It involves opening and closing multiple positions daily. Typically, forex scalpers will opt for the most liquid forex pairs because spreads are narrow, enabling them to make small profits with each trade. Scalping results in the highest number of opportunities compared to other trading strategies. However, it requires even more time investment than day trading. In addition, it has the lowest risk-to-reward ratio.
Make Daily Profits with AJ Capital’s Help
AJ Capital is an automated trading expert who runs the Pro Trading University – a trading university for students to learn about forex trading. AJ Capital became a professional forex trader in 2011, and he has since been outperforming the top hedge fund managers in the world.
Visit Pro Trading University to start your forex trading education. Pro Trading University also holds a free 2-day online event. You can register for the event by following this link. Event attendees get a free copy of the daily income automated trading system that will help you take your forex trading to the next level.