Day traders in all global locations need to rely on fast decision-making and speedy reactions in order to enter and exit any financial trades at the right times. Of course, it is possible to set trading stops to limit losses in some trades, but when it comes to making snap buy decisions for FX, shares showing massive hikes in prices, or simply comparing apples and oranges to source the best purchases for the day, it’s vital for all day traders to possess a sharp intellect and quick wits.
Importance of keeping your head when trading FX
Forex can be an exciting day trade investment, particularly when you can opt to leverage your broker’s funds to cash in on increases. ESMA (European Securities and Markets Authority) do limit the amounts of leverage that can be offered to retail day trader customers in the UK and Europe, however, there are still opportunities to opt for international branches of your usual brokerage to gain higher levels of leverage. Making the snap decision to buy any currencies should be based on sound judgement and research, however.
The existing ESMA leverage limit for all major currency pairings is 30:1, meaning if you want to place £100 to forecast that the US dollar will be higher than the UK pound by the end of the day then you can actually use your leverage to place a £3,000 trading order. This may seem a huge amount of money to individuals who don’t deal shares, however, FX rates generally only move a fraction in a day, so you could still only profit by tens of pounds rather than hundreds. It’s not difficult to understand why so many regular day traders opt to take their trading accounts offshore.
What about trading shares on a daily basis?
In similar vein to FX trading, share dealing can be a heady, but volatile financial risk take on a daily basis. The shares you choose to buy could well be rising at the time of purchase, but you always need to factor into the deal the trading costs you will pay and check out the price you’ll receive for any sell orders.
It can be so tempting to rush into buying shares at the start of the day, but it’s always a good idea to wait and see how the market is performing. This is particularly true for Monday trades, as this is the start of the business week so trades in shares of businesses that have experienced good results or other great news over the weekend could shoot up like rockets in the first few minutes. Unfortunately, there’s no guarantees that these shares will maintain their increased buoyancy.
How can I develop better and faster trading reactions?
There are lots of different ways to try to boost your reflexes to ensure you deal the best trades at exactly the right times. This has a lot to deal with hand-eye-brain co-ordination and some hobby activities to consider include regular gaming on a variety of devices or playing online slots. Some of the The main benefits of activities like these are that they can help boost adrenaline levels and get you into the habit of speedy reactions within the games.
Tips for novice day traders
If you’re new to investing and want to find out more about different options and ways to be benefit most from day trading, take time to read our post on tips for beginner investors. We offer lots of useful financial advice covering all types of trading options, to help you develop your strategies and skills.