Is day trading a sustainable investment strategy? 

Once upon a time, the world’s stock and forex markets were only really accessible to a select few investors, who worked for the world’s largest fiscal institutions.

However, this has changed considerably during the digital age, with daily trading volumes in the forex market having increased from $5.1 trillion in 2016 to more than $6.6 trillion just five years later.

This reflects just how the market has opened up to speculative and part-time investors, with so-called “day trading” having become particularly popular as a result. But what exactly is day trading, and how can you get started in this endeavour?

What is Day Trading?

In general terms, day trading refers to the practice of purchasing and selling a security, usually within a single, 24-hour period.

Although this can prove to be a viable strategy in any marketplace, it’s most synonymous with the forex market and (slightly less commonly) stock trading.

More specifically, a trader will execute several orders and open multiple positions as a result of this strategy, in a bid to capitalise on short-term price movements and the market’s innate volatility. 

Day traders will never maintain these positions overnight, while they’ll also utilise large amounts of leverage to optimise their profit from each individual price movement.

How Can You Get Started?

In terms of execution, you should note that day trading requires a highly organised approach to investment and the considerable investment of time.

So, if you want to achieve sustainable success and perfect your various strategies, you’ll have to devote a great deal of time into the endeavour and commit to analysing large swathes of data in real-time.

Of course, there’s often a significant chasm between theoretical knowledge and practical trading experience, and this can create challenges when day trading with real money. 

So, we’d recommend that you bridge this gap and get started by initially trading via a demo account, through which you can access a simulated and real-time marketplace while safely honing your individual strategies.

What are the Best Strategies When Day Trading?

When it comes to the general strategy of day trading, the single best piece of advice is to start small. Typically, this means day trading just one or two major pairs, with a view to plotting their price movements accurately and making short-term gains.

This will make the process manageable in terms of time and preparation, while it also creates a foundation from which you can scale your efforts organically in line with experience and profitability.

It’s also important to maintain a deterministic outlook and understand the laws that govern change in the forex market, as this can help you to avoid emotive decision-making.

Make no mistake; this makes it far easier to adhere to a carefully defined plan and day-trading strategy, as you look to maintain your focus in the wake of various market distractions.