The Definitive Guide
Intra-day trading in the forex market is the process of buying and selling your positions during the same trading day. This involves you placing limit orders at different prices to buy and sell your currency positions at a specific price before it expires. With so many traders trying to place their trades at every available opportunity, this leads to high liquidity conditions that make it easier for traders to execute their trades. However, this comes with its fair share of risks that even experienced forex traders should consider before engaging in intra-day trading. If you’re interested in reading more about this topic, read on…
What Is Intra-Day Trading?
Intra-day trading is the process of buying and selling your positions during the same trading day. This involves you placing limit orders at different prices to buy and sell your currency positions at a specific price before it expires.
Pros of Intra-Day Trading in Forex
– High Liquidity – The high liquidity in the forex market makes trading in intra-day a great way to take advantage of the strong liquidity. It’s easier to place your orders at the best price you want.
– Easier To Time The Market – Intra-day trading allows you to place your orders at the right time of the day. It means you don’t have to wait for the market to open while you’re trying to time your trades.
– Forex Market Is Open All The Time – While you have to be careful about holidays, weekends, and other times when the forex market is closed, intra-day trading allows you to take advantage of the open market 24/7.
– Trading With Less Money – Intra-day trading allows you to trade with a smaller amount of money. You only have to have a certain amount of money at your account to be able to buy and sell your positions.
– Reduce Market Risk – Intra-day trading allows you to reduce the market risk of your trades because you only have to commit a small amount of money to your trades.
– No Commodity Market Risk – With intra-day trading, you don’t have to worry about the risk of the commodity markets affecting your forex trades.
– Better Opportunity To Make A Profit – Intra-day trading allows you to place your orders at different prices to buy and sell your positions at the best price before it expires.
– Access Markets During The Day – If you don’t want to trade in the forex market during the day, you can trade in the commodity markets or foreign stock markets.
– Less Confusion – Forex trading can be confusing, especially when you’re just starting out. Intra-day trading allows you to focus on your trading strategy and don’t have to worry about the time of the day.
Cons of Intra-Day Trading in Forex
– You Can’t Time The Market – Intra-day trading is more of a market-neutral strategy that allows you to trade in the forex market at any time of the day.
– No Commodity Market Risk – With intra-day trading, you don’t have to worry about the risk of the commodity markets affecting your forex trades.
– Less Opportunity To Make A Profit – Intra-day trading allows you to place your orders at different prices to buy and sell your positions at the best price before it expires. With intra-day trading, you only have one chance to make a profit or lose your money.
– You Don’t Have As Much Money At Your Account – Intra-day trading allows you to trade with a smaller amount of money. You only have to have a certain amount of money at your account to be able to buy and sell your positions.
– Forex Market Is Closed On Certain Days – Intra-day trading allows you to take advantage of the open forex market 24/7. However, you can’t do this on certain days such as weekends, holidays and other times when the forex market is closed.
– Less Flexibility – Intra-day trading can be time-consuming and you have to be available all the time. You also have to have a trading plan in place to know when to buy and sell your positions. You also have to know when to exit your trades if they’re not profitable.
also check What is forex swing trading? and What Is Forex Scalping?