Intraday Forex Trading: 7 Top Tips

Intraday Forex Trading is an approach that involves opening and closing positions within the same day. It's one of the most practiced approaches, as - under certain conditions - it can prove to be very balanced and represent a profitable middle ground between scalping (which is a subset of intraday trading) and swing trading. However, it's not easy to manage an intraday trading activity. Below is an overview of this approach and some tips to follow it best, optimizing gains and limiting losses.

Why Intraday Trading

Intraday trading might be considered stressful by some. In fact, it imposes a radical change in approach, which often translates into a different organization of one's time. Intraday traders are almost necessarily full-time traders or those who dedicate several hours to investing. However, if we exclude this disadvantage (although for some it's not one at all), we can find many good reasons to adopt this approach. First, it allows you to avoid overnight fees. Those who keep positions open from one day to the next, thus adopting a medium or even long-term approach, must bear an additional cost. This can be annoying, and in most cases it is, as overnight fees, in addition to being generally heavy, are also hardly predictable. Second, intraday trading is very adrenaline-pumping. Those who consider trading only as an activity that should bring in money might not consider this advantage as substantial. However, it must be said that a bit of "passion" or simple enjoyment is still necessary. It's inherent in human nature: if you do something you enjoy, the performance is better. Well, intraday trading is certainly more dynamic than swing trading, so it can produce - in addition to a lot of other things - fun. Lastly, intraday trading is potentially much more profitable than other approaches. This is true because, first of all, it allows you to open more positions, given a specific time frame. And then because it allows you to take advantage of intraday price fluctuations, which are abundant in Forex.

Tips for Intraday Trading

It goes without saying that intraday trading is difficult, not only in terms of intellectual and mental commitment (given the time it takes up in the day) but also technically. Therefore, it's good to follow some practical tips. Take responsibility for what happens. It may seem obvious, but it's only true to a certain extent: taking responsibility for your actions is the first step to successful trading. This applies to all types of trading but especially to intraday trading, an approach that can involve, in absolute terms, a very high number of losses. When you lose, it's essential to understand why, and to understand why it's necessary to point the finger at the real culprit: yourself. So don't blame the market, the trading system, or the broker. If you persist with this negative attitude, you won't be able to correct your trajectory. Don't focus only on money. This advice may sound strange. After all, for what reason should you trade if not to earn money? It's true, there's no arguing about that. However, when trading, it's good to consider what could be defined as the intermediate objective, which is respecting the trading system in its entirety, from technical analysis to pure operation. This is because, when you think about money, you risk triggering an emotional dynamic that is not good for trading. You risk thinking about possible losses, and therefore experiencing fear, anxiety, etc. So, stay focused on your rules, always and in any case. Emphasize risk management. Rather than money, which you should only deal with when practicing money management, your thoughts should be occupied by the need to calculate and manage risk. To do this, there is risk management, a practice that has undergone strong development in recent decades. For example, identifying stop losses and take profits, essential price levels (in the first case) to limit losses and prevent profits from being eroded by a trend reversal, are part of risk management. Risk management, therefore, is the antidote against the darkest, yet physiological, evil of the market: uncertainty. Always pay attention to commissions and spreads. Commissions and spreads are elements that are often overlooked, as the trader, once they have gained some experience with a given broker, tends to trust them. Yet, these are elements that can change, and often change for the worse. The result of these dynamics is terrible: eroded earnings, wasted effort. Let's be clear, it's all legitimate: the broker has every right to set commissions and spreads as they wish, after all they're not doing charity. Therefore, it's the trader's job to incorporate these items into money management calculations, in order to assess the potential profit of a trade. Don't rejoice over winning but random trades. It's rare, but it can happen. From time to time, it happens to go against your own rules, improvise perhaps in the grip of one of the classic emotional storms and get it right. A positive thing, right? Sure, but very difficult to manage. It can lead to negative long-term consequences. That is, to the maturing of the belief that, every now and then, you can derogate from the rules, you can trade in an undisciplined way. In this regard, it's good to reiterate a concept: in trading, luck has no place. It's a dynamic that should be ignored altogether. So, be disciplined. Always be disciplined: in victory as in defeat. Decide on hours and stick to them. Intraday trading, as we have already said, takes a lot of time. The problem is that there is no one who sets a limit, who circumscribes the trading hours. You have to do it yourself. Especially in the beginning, and perhaps in conjunction with the first winning trades, there is a strong temptation to operate always, in the hope of seizing all possible opportunities. Well, the advice is not to do it, you would be at risk of burnout. Rather, decide on hours, just as if it were working hours, and respect them. You will benefit from it both in terms of effectiveness and quality of life. After all, even when things are going well, you shouldn't live on trading alone. Here are the best times to trade. Only trade when you are well. This is an important aspect but very often overlooked. When talking about trading, the focus is (rightly) placed on technique, strategy, and operation. Often, however, the emotional sphere is ignored, which nevertheless plays a fundamental role in trading. Now, to withstand the incredible stresses of the market, a certain basic emotional stability is necessary. It's a gift, but you can still push to create the necessary foundations for a peaceful activity, resistant to shocks. How? Very simple: avoid trading when you are not emotionally well, when you are stressed by external elements or are sad, worried, etc. The risk is not being able to bear the stress deriving from trading, getting carried away by emotions and losing lucidity.