One popular way to trade forex is through 'day trading'. But how does forex live day trading work? And how do you find the best forex day trading accounts?
What is forex live day trading?
When you trade forex you predict whether the value of a currency will rise or fall in relation to another currency. For example, if you think that the euro will increase in value against the pound, you would 'buy' the euro and hope that your hunch was correct.
If the euro does increase in value against the pound you can close your trade and profit. However, if the euro falls in value against the pound you will make a loss.
Forex day trading is one of the most promising - and riskiest - opportunities for earning income in the forex market.
Day trading involves trading foreign currency by buying and selling it in the same day, rather than holding onto a trade for several days or weeks.
As fluctuations in the currency markets can be more pronounced on a daily basis, it is a riskier strategy as you don't get the benefit of trends averaging out over a longer period.
What to look for in the best short term trader accounts
If you plan to day trade forex online then you will need to open an fx trading account. And, with dozens of accounts available it pays to shop around and compare the best short term trader accounts before you sign up.
Firstly, you will have to find an account that offers day trading. Not all brokers offer this service and so you should compare those brokers that offer short term fx trading.
Secondly, when searching for a foreign currency trading platform you should establish how a broker will let you manage your account. If you are planning to day trade then it is essential that you can buy or sell quickly. So, an online service so you can trade in real time should be the minimum you expect.
In addition, the best short term trader accounts will also let you manage your account online. As a day trader, accessing currency markets on your iPhone, Blackberry or smart phone could be invaluable.
Finally, you should establish what the 'daily spreads' are on your forex live day trading account. The spread is the difference between the 'buy' and 'sell' price of the currency and narrowing your spread can help you maximise your profits.