Forex day trading 9

How much do Forex Traders make a day?

Federica D’Ambrosio is a Senior Trader and CFO at Audacity Capital. She graduated in Finance from Luiss University enhancing her knowledge on global markets completing a Master of Science at Fordham university in New York.

Looking at the benefits of forex trading, it is available all day Monday to Friday, has low transaction cost, requires a minimum amount to start, governments and central banks cannot control the forex market, and many more, you can conclude that forex trading is a lucrative endeavour that can make you a fortune.

Should you quit your job, how much will you make trading forex? You have the money and some knowledge; should you start trading immediately? Here is what will make you a successful day trader.

How Do Forex Trader Make Money Day Trading?

Forex day trading is buying and selling forex pairs throughout the day. It can involve taking long trades taking hours or the whole day or small time frames like 1- minute charts. Traders using this type of strategy aim at making reasonable profits within the day. It works well with highly volatile pairs.

This is what happens in day trading; a trader analyses the market, and when they see a good pair, they choose entry and exit points. After being successful or losing the trade, they leave until they find another profitable position.

However good it may sound, day trading also makes losses. Other trading options are weekly, monthly, annually, and more. But we are here for day trading. So how much do forex traders make?

The standard currency pair quotation system involves two currencies listed using three-letter abbreviations. The first or base currency is on the left, while on the right is the quote currency. There’ll be two prices for each pair in a two-way quote system for buying and selling currencies, and the bid and the asking price.

Placing a Forex order involves giving your broker or brokerage software commands showing the currency pair to buy or sell. You’ll indicate the direction of trade, whether short or long, and the price to trade. Trade orders tell the platform the quantity to buy, where to deposit that profit, or when to exit the trade.

In both instances, the market needs to go either up or down for you to make a profit. That’s true whether you bought weak to sell strong or you shorted the market, waiting for the price to fall.

What Makes A Successful Day Trader?

A successful day trader works with a strategy.

Success in terms of profit can differ vastly in the Forex world. A Forex trader and make 10.000$ a day, while another, using the same strategies makes 10.000$ a month. Therefore is not only about what strategies you use, however also about different factors like experience, execution, decision making, and more.

Having said this, a Forex strategy looks at two things;

The win rate.

A day trader has a specific number of trades per day; let’s take a random number, say 15. The win rate is the number of profitable trades in the 15 trades. So if you win 10 out of 15, your winning rate is 66% which is achievable but keep following, and I will show you why almost 99% of day traders won’t achieve it.

Reward and Risk.

There must be more wins than losses to be profitable. For example, if you have a target of 5 pips, win for every trade. And you also aim at putting 15 positions a day; you make a profit of 75 pips. Nevertheless, we said you lose 5 of 15. Therefore, 75-15 = 60 pips.

Let’s look at a currency pair example:

For example, you are a day trader who focuses on cryptocurrency. On this day, ETH/USD is looking good, so you enter the market on the 1-minute chart and see a possible bullish move and buy ETH/USD. After a minute, the trade goes against you, but your stop loss is at 3 pips, starting the day at a loss. So you analyze again after 10 minutes, you set 3 positions where two respect your order and 1 goes against it. By the end of the day, you have made 60 pips but lost 15. So if you are using a lot size of $100,000, you will make $20 per day.

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Leverage.

Leverage is the financial muscle traders borrow to acquire assets and increase their profit. Brokers provide leverage. So the type of broker you pick matters. Brokers can provide leverage of up to 50:1. Meaning if you have a $1000 capital, you can trade up to $50,000 with the same risk of $1000. Not to get you too excited, the higher the leverage, the higher the profit, and so is the loss. So leverage is a good tool, but master how it works before using it.

How Much Money Can Forex Day Traders Make a Day?

There are many factors to consider before answering this question. But if you look at the elements you need to be a successful day trader above, you can quickly get an answer. First, however, let’s assume you started day trading with a capital of $1000. In your strategy, you place a maximum of 15 trades a day (too many), lose 5 and win 10. You are looking at a total of 60 pips per day. As mentioned, you make roughly $20 a day. For a month, which is 20 days since you only trade Monday to Friday, it will be: $20 x 20 days = $400 a month. If you consider commissions and trading and withdrawing fees, you remain with roughly $330 In case you plan to start trading with an initial investment of $10000, you will make; 1% x 10000 = $100 risk per trade, using a lot size of 0.10 because the amount is bigger 0.1 x 60 = 6 but you make $60 because each pip with the lot size is $1 $60 x 20 days = $1200 adding up to $14,400 per year. However, if you are using a bigger lot size you will make more. On the other hand, a $100 account will make; $100 with a lot size of 0.01 because it is a small account 0.01 x 60 = 0.6 which is $6 per day. $6 x 20 = $120 per month Not bad, right? However, remember that the forex is never a perfect market as these figures look. Getting 100% turnout every day is not typical, let alone simple. However, the aim is to keep losses minimal. You cannot eliminate them entirely. The truth is that approximately 1% of day traders become successful at the end of the year. This shouldn’t scare you because you are amongst them if you follow your strategy. How much time you invest in learning and understanding the market is critical for profitable trading. Something fundamental not mentioned by many is trading psychology. Psychology in trading is something people should be willing even to pay to acquire. The ability to keep emotions out of trading is vital.

What Do I Need To Be a Successful Day Trader?

Risk Involved.

Pioneer traders insist that your risk should be 1% of your capital in one trade. Therefore, if you have $1000 in your trading account, you should risk only $10 at a profit ratio of 1.5%. It sounds so little to make such an amount, yes. However, discipline is critical. How much forex traders make in a day depends on their invested money. It is worth noting that forex is not a get-rich-quick scheme.

Knowledge Investment.

How knowledgeable are you about the subject? As you know, forex is not gambling nor a game of luck. It takes time and money to master the skill. Therefore, apart from the money you can put in forex, invest in knowledge about how the market works. That’s why you are advised to trade on a demo account before putting in real money.

Discipline.

Congratulations on putting money and time into forex trading. However, let me remind you that how much money you can make trading forex a day can also be the same as how much money you can lose. It all depends on the level of your discipline to your strategy. If your strategy says to use 1% of the capital and execute 15 trades per day, you will be killing yourself to go against it. If you make your daily target, be disciplined to stop. You have probably heard people who made thousands of dollars in a day and lost it all on the same day.

The Future of a Day Trader.

Jack Dorsey once said, “you cannot build generational wealth with day trading.” However, if you have a good strategy and stop taking day trading as a hobby, remember that you can make money. But on a long-term basis, you need to consider having growth plans. As you know, that day trading requires you to be on your computer in many events, even with stop-loss options. Put more effort into learning new techniques and approaches to the market. It can be a good career option that doesn’t need you suited to work. You can work from anywhere in the world as long as you have the basics; a computer and a fast internet connection. However, to make forex day trading a worthwhile career, you need to remember that you are good as dead without discipline. Patience and good risk management techniques will keep you afloat in the industry. Lastly, invest in forex knowledge first before you throw money into a ditch. If you don’t have enough funds to start your career in trading, you can register with Audacity Capital to get a $15000 funded account.

Forex day trading 8

How to Day Trade the Forex Market In 2 Hours or Less a Day (EURUSD or GBPUSD)

Learn to how to day trade the EURUSD in two hours or less per day. See the best times of day to trade, what time frame to us, and how to enter and exit trades. Learn how to manage risk and plan out each trade.

James is a lead editor for Invezz, where he covers topics from across the financial world, from the stock… read more.

Updated: Oct 12, 2022.

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The following guide assumes a basic understanding of how the forex market operates. If you are new to forex, check out Introduction to trade Forex, which provides some background on trading currencies.

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Day Trading Forex – Basic Guidelines.

Most of my day trades in the forex market are based on these simple concepts. For simplicity, assume I am talking about an uptrend unless otherwise noted. The same concepts apply to downtrends.

Trade when London and/or the US markets are open. I opt to trade from 8:30 to 10:30 AM EST (15:30 to 17:30 on my charts below), but anytime while London is open is fine. I trade for about two hours per day, that is all. I use a one-minute chart. Only trade in the direction of the trend. Wait for a pullback. The pullback must stall out or show signs the price is starting to move back in the trending direction before reaching a major prior swing low . On the pullback, the price must consolidate (move sideways)–stop falling–for at least 2 bars+ (2 one-minute bars, or more). Buy a breakout above the high price of the consolidation. This requires patience. If the price stalls and then breaks out in the opposite direction of the overall trend then there is no trade. As long as the trend is intact, continue to look for pullbacks, consolidations, and then consolidation breakouts in the trending direction. Stop Losses and Targets are set at the start of each day and may be slightly adjusted during the day based on expanding or contracting volatility . Measure the trending price moves between pullbacks, and then subtract several pips from the smaller ones…that is your target on each trade. The stop loss is placed just outside the consolidation on the opposite side of the breakout. In order to take a trade, the expected profit must be at least 1.5 times the risk of the trade. Determine the stop loss and target based on these methods, then see if the reward is more than 1.5x risk. If all is good then proceed. If prior trending moves show that it will be hard for the price to reach a target that is at least 1.5x risk then avoid the trade. Exit all position at least two minutes before major news events. For the EURUSD and GBPSUD that includes major news related to the EUR, GBP, USD, and CHF. Don’t trade until after the news is released. Cancel all pending orders before news and when you are away from your computer. Create a day trading routine to avoid mistakes.

Knowing the strategy isn’t enough, and below there are multiple examples of this strategy in action. Price is constantly moving, so we need to be able to plan our trades before and as they are forming. Before a trade is taken we also need to know what we will do once we are in the trade, depending on what the market does next.

Trading Beyond the Hard Right Edge.

If you want to really learn how to day trade the forex market (or any market), master “trading beyond the hard right edge.” Most people look at what has already happened on their chart, come up with one trade idea and then pray it works out. Since we can’t see what happens next (beyond the hard right edge of our chart), inexperienced traders tend to think of scenarios they want to happen, or that they fear. Most people gravitate toward one or the other. They think about entering a trade and the price flying in their direction for an easy profit and high-fives from friends. This is fantasy. Or they enter a trade and imagine the price plummeting against them, stopping them out. This is fear. Either of these scenarios are possible, but so are a host of other possibilities, and which one is more prevalent in your mind will bias your trading.

We don’t want to be biased by one extreme view. Rather, we want to consider all possibilities: the price could drop, rally, or do nothing.

If you are very optimistic, you may miss clues that the market is turning against you. If you are very pessimistic you may avoid a good trade, or jump out of it too early. What is missing? Your strategy gets you into a trade, with an initial profit target and stop loss. Once you are in the trade though, it is a different world. All sorts of things could happen. What if the price moves in your favor slightly and then starts to move against you? What if the price moves to within 0.1 pips of your target and then reverses? What if the price does absolutely nothing after you get in…for 10 minutes? You were expecting something to happen, and now that it hasn’t what do you do?

As a day trader you need to consider the various things could happen, and what you will do in each circumstance. This may seem impossible, but it’s not. Actually, there are only a few things that could happen. The price can rise, fall, or move sideways, and it may do it quickly or slowly. The combination of the price moving higher-quickly tells us something different than higher-slowly. A quick downward movement followed by a slow upward movement tells us something different than slow-down and quick-up.

Have a plan for each combination that could arise. It is a fair bit to think about…but you have a lot of time while trading. Placing an order takes almost no time or effort. Hitting buttons is easy. The real effort is the thinking and analysis that occurs before the trade. Once the trade is placed, you should already know what you will do in any situation. Develop your thinking and analysis skills so you can do this on the fly.

How to Day Trade the Forex Market – Active Trade Management.

Trading beyond the hard right edge is an advanced form of active trade management. It is a mind frame, where you look at what has happened and come up with scenarios for exactly what you will do (exit, adjust stop loss or target, or change nothing) in various scenarios after you enter a trade. As discussed above, there are only a few things need to consider–direction, size of moves, and speed of moves.

Here are some examples of how I use these three factors to strategize every day trade.

If the trend is strong and the market isn’t giving any warnings signs, I will usually let the price do whatever it wants. My target is likely to get hit, so I leave my stop loss where it is and if I get stopped out I get stopped out. It was worth the risk because everything is moving well. If the trend is very strong, I also decide before the trade if I am allowed to adjust my target or not. If I am allowed to increase my gain, where am I going to move the target to? This will be based on the length of prior price swings (we play odds/tendencies, not what we hope will happen). If I adjust my target, and then price pulls back from it, do I get out or let it make another attempt at the new target? Decide what you will do before the trade is even placed. Usually, I don’t adjust targets. Maybe 1 in 10 trades is worth adjusting the target for. Remember, the target is based on the lengths of prior swings seen that day, so unless there is very good reason that this particular move is likely to be much bigger than the others (a unicorn) there isn’t usually sufficient reason to adjust a target. If a target is approached, and just barely missed, I usually close the trade immediately. Never let a trade that almost hit your target turn into a loss. This is why you need to plan ahead; if you don’t, it will be very hard to hit that “close” button when profit is evaporating and you are experiencing regret/anger/fear/hope. Various situations call for different exits. For example, if things look pretty good, but not ideal, I will allow the price to make three attempts to move in my direction. If it moves in my direction three times but doesn’t hit my target, I look to exit. I may also opt to give it only two chances to go in my favor if the setup is slightly less favorable (trend not as strong). Exit after two attempts if it doesn’t hit the target. If the trend is likely over but you are squeezing the last bit of juice out, or if the trade is at an inflection point which could go either way, only give it one attempt. If it moves in your direction and then falters, bail immediately. It is probably a false breakout.

To day trade the forex market successfully you need to read and adjust to market conditions. You decide which direction you are going to trade, and before the trade you decide how to manage that trade. Where you entered is no longer relevant; you can’t do anything about your entry price once in a trade. You adapt to what happens after you are in the trade. Like Napoleon on the battlefield, you have calculated everything beforehand.

How to Day Trade the Forex Market – Trade Examples.

Here is the April 14 EURUSD 1-minute chart, along with comments below. I traded for about an hour and a half.

How to day trade the forex market – EURUSD 1 minute.

This day (two hour period) was dominated by news at 830 AM EST (1530 on chart). The brown boxes mark consolidations in the price which is what we are watching for. I used a 10 pip stop loss and 18 pip profit target on this particular day.

The first trade was the first slow down after a very strong move higher. This is one where you just look at the upside momentum and decide you need to get in, on a pullback, as soon as the price starts moving higher again. The long trade occurs as the price crosses above high of the sideways movement (high of the brown box). +18 pips. Trade 2. The price is still rallying, and then has a pullback (just before trade) and then pops higher again. When it pulls back again, it pauses at almost the same low, showing very little selling momentum. This one you want to give a chance to hit the target. +18 pips. Trade 3 and 4. Trend was up. Kept buying. Stopped out on both. Trade 3 never really moved my direction. Trade 4 did move in my direction but then reversed. Cut the losses early. -9 pips and -5.3 pips. Trade 5. We now have a little downtrend, but we can see the price is still respecting the 1.0655 area (horizontal line). Given the overall moves higher, going short isn’t even a consideration yet. Buy again when the price stalls at support and then moves higher. The price just about reached the target and then pulled away from it. Closed immediately. +14.9 pips. Trade 6. Didn’t actually take this one. But it was similar to trade 5…but with the added benefit that just before this trade the price made a short-term higher high (at 16:58 relative to the minor high at 16:42). That would have been another profitable one.

In less than two hours of trading we had 5 trades: 3 winners and 2 losers, for a total of 36.6 pips. Assume you have a $2000 account and risk 1% (can lose up to $20 on each trade). With a 10 pip stop loss you can trade 2 mini lots to stay within this risk tolerance. Therefore, your daily profit is 36.6 pips x $1 (how much a mini lot is worth per pip) x 2 (how many mini lots you are trading) = $73.2, or 3.66%. With a $10,000 account, you make $366 for two hours work. Once consistent, you can increase risk to 1.5% or 2% per trade (no need to go higher than that), pushing your revenue to $732 on a $10,000 account. That’s based on one strategy…the forex strategies guide has many more.

Here is the April 15 EURUSD 1-minute chart (I learned a new trick in MT4–if you drag an order from your account history onto the chart it will put the trade levels for that trade on your chart).

On April 14 we had lots of “clean movement”. On April 15 we had a Euro conference begin right around the time I started trading (1530 on chart) and that created some price whipsaws. Best to avoid…but as we can see I did take one trade in there…

Based on swings prior to the first trade I opted for a 14 pip target and 8 pip stop loss. We can see the price moving mostly sideways but in a very jagged way. Just before the first trade the price tried to move lower, but failed. It rallied paused, and I bought when the price broke above the brown box (I manually draw these…for you…I don’t’ draw them while I am actually trading). This trade was almost 10 pips onside, and then I took a full loss on it. I make mistakes too. Given the choppy nature we were seeing, I should have bailed much earlier. The reversal was very fast, so maybe it is a flat trade, but at worst should have only been only a -5 or -6 pip loss. This is a slightly different strategy than the one discussed above–I wanted in because the price had just had a false breakout, and not necessarily because of the overall trend (like all other trades). Trade 2. Sharp move in our direction, little pullback to near old resistance (range top), pause, enter as price starts moving higher. Classic! +14 pips. Trade 3. Pretty much the same. The price is now moving a little sideways, but the price held above the prior swing low, and all the elements are there so I am triggered in. +13.6 pips (entry price had slippage slightly reducing profit on trade–target stays at originally planned level despite the slippage). x: I marked a box and put an x under it. This slowdown/stall is way too close to a recent high. This trend has been running up and a deeper pullback is likely. NFs: tried to get long twice, but to no avail. Price kept dropping. This why we wait for the price to move back in our direction. It never broke above the brown box, so no trade. By the second NF you can see my comments…I am basically saying I will only give this trade one chance to go (if it fills, which it didn’t) because by this time the price had retraced the whole last leg of the rally, indicating weakness. The price then lulls a little and it is almost 10:30 AM EST (1730 on chart) so that was it for the day.

Overall, in less than an hour of trading we had 3 trades: 2 winners and 1 losers, for a total of 19.6 pips (a bit higher if I don’t make that mistake on the first). Assume you have a $2000 account and risk 1% ($20 on each trade). With an 8 pip stop loss you can trade 2.5 mini lots. Therefore, your daily profit is 19.6 pips x $1 (how much a mini lot is worth per pip) x 2.5 (how many mini lots you are trading) = $49, or 2.45%. With a $10,000 account, you make $245 for an hour of work….you don’t even need to give up your day job. Once consistent, you can increase risk to 1.5% or 2%, pushing your revenue up to about $490 on a $10,000 account (for this particular day).

To learn more about how to day trade forex, including basics to get you started (order types, currency pairs to focus on, defining trends…), 20+ strategies and a plan to get you practicing and successful, check out my Forex Strategies Guide for Day and Swing Traders eBook.

Here are a few more chart examples, this time from the GBPUSD 1-minute chart.

Here is a chart from July 27. As the US session begins the price is ranging in a small band, which isn’t attractive for trading. By 16:20 (a little more than an hour after the US opens) though we have seen a strong move down, indicating the start of a downtrend. During the first two hours of that downtrend I have drawn three potential trades. These were picked because there was a pullback and a consolidation. There were other pullbacks with no consolidations, and other consolidations with no pullbacks. The three trades highlighted had both. Waves had been moving about 10-12 pips prior to our trades, so a 10 pip target is realistic, along with a 5 to 6 pips stop loss. No problem on any of the trades this day; take home 30 pips, multiplied by however many lots you are trading.

Days like the above are fairly easy. When there is a trend, we continue to trade it until there is evidence of a reversal. At that point, we wait for another signal. But not everyday has a beautiful trend. Sometimes the price action is much choppier, and if you don’t pay attention you can lose a lot of money in a hurry chasing big moves that never come. NOT TRADING WHEN CONDITIONS AREN’T RIGHT IS JUST AS IMPORTANT AS TAKING ADVANTAGE OF OPPORTUNITIES THAT DO ARISE.

The next charts shows the day prior. The London and US overlap session was a snooze, as traders awaited the Fed Interest Rate Announcement later in the day (Tip: if there is a big announcement later in the day, the morning is often fairly quiet as major institutions await the news). One thing to always note is the y-axis. On the chart above the price moves about 90 pips. On this day, the price moved about 30. So those move that look big, actually aren’t. I recommend that you always set your y-axis to about 80 or 90 pips (may change a bit over time), as this will keep movements in perspective from day to day.

Once the US session gets going, the price drops, but then bounces above where the decline began. No short. We then get no consolidations which would offer us a long trade. The price then drops below prior swing lows, negating any long trades. By this point…about 16:15 we can see that average wave is only about 4 pips. That isn’t big enough for us. We typically need at least a few pip stop loss, so if we can only expect to make a few pips, the reward:risk isn’t there.

Also, notice how a trend never really gets going. The price doesn’t move in one direction, pullback and consolidate. Rather, it reverses course abruptly (moving past a prior swing high/low), or doesn’t provide an opportunity to get in. If there is no good setup, don’t trade.

On days like the above, once you see the market isn’t moving very well, it is probably best to step away after an hour or so (especially if you know there is a major news announcement later in the day). If you sit there all day, you are going to be tempted to trade. Instead, if you sit there for an hour and the market is absolutely dead, go do something else for a few hours, and then tell yourself you can come later and see if there are any opportunities in the US session (especially if a news announcement is coming out), or just wait until the next day. If you trade during the London session, and it is dead, stop after an hour and come back and check your charts once the US session begins.

Not finding a good trading opportunity sucks, especially when you sit there all morning. But you know what sucks even more? Losing your capital on trades you know you shouldn’t be taking, which then messes with your head and reduces the capital you have to throw at good trades which may come tomorrow or the day after.

Below is another trading day example. This time, a nice strong trend is in play. On this chart, I have added in a few comments about deeper pullbacks. When you have a very strong trend with long trending waves, like in the chart below, it is reasonable to assume that some pullbacks will be more complex or deeper than others. Those deeper pullbacks are often forecast by the price moving above recent minor swing highs (downtrend, or dropping below minor swing lows in an uptrend) and the occasional weaker wave in the trending direction. These are pieces of evidence that tell us to be a bit more cautious and maybe wait for the next consolidation before trading (assuming overall trend remains intact). They don’t indicate a major reversal though. For that to happen, the price needs to fail to follow through in the trending direction, like it eventually does at the far right of the chart.

Additional Notes on Day Trading the Forex Market.

I recommend using a daily stop loss and a loss from top. If you lose 3% (three trades risking 1%), stop trading. Read Day Traders: How and Why to Use a Daily Stop Loss for more details. Once you master this method, this should be a rare event. We call it “blowing up” (when you lose three trades right off the bat and have to stop trading). You should only blow up once every month or two.

On days were volatility is lower, your stop loss and target will be a bit smaller. But by continuing to risk 1% (or 1.5% or 2%), your position size will increase. If you’re well practiced you still should be able to make a good daily income, no matter if volatility contracts or expands. Be aware of super tiny stop losses though, and huge positions sizes…that can spell disaster (see Reducing the Risk of Catastrophic Trading Losses).

For day trading forex, use an ECN account with near zero spreads, and pay the small commission if you plan on day trading forex regularly. When volatility shrinks the tight spread becomes more important. When it is quieter, the spread becomes much more of an obstacle, because if it is quieter our targets are going to be smaller. Our payoff relative to the spread decreases. On really quiet days, or days where you don’t see valid trade setups, you have to be content not to trade. Save your capital for better opportunities.

When daily movement in the EURUSD is below 70 pips, day traders tend to struggle a bit more because there is less movement than when the pair is making 100+ pip moves per day. If overall volatility in the EURUSD is really, check out Find Day Trading the EURUSD Tougher Lately? for some possible solutions.

My order is poised in anticipation of a trade. Assume I want to buy. I set up a buy stop order (don’t confuse buy stop with a stop loss order–the stop loss order is attached to our buy stop order) with a 8 pip stop loss and 14 pip target (or whatever it is on that particular day). I then place it way above the current price (so it doesn’t accidentally get filled before I want it to). When a slowdown forms, I drag the order–with stop loss and target attached–down to the entry price I want (just above brown boxes on charts). That way, my order will trigger as soon as the price moves out of the brown box. If you use market orders and are even a second delayed the price could be well away from the entry point we want (not good!). You can set this up using an MT4 plugin, discussed here. If you trade with a broker that supports NinjaTrader–a great trading platform–that will also work well.

From looking at these examples, day trading may seem easy. It isn’t. It will take 6 months to a year of practicing two hours a day (including a few hours on weekends going through charts, reviewing, self-assessing and working on problem areas) before you will likely be able to trade like this consistently (see 5 Step Plan for Forex Trading Success). What you are basically doing is planning your trades before the market even moves to your entry location. You have an idea of where you want your trades to take place before the market even approaches that area. If the market doesn’t go there, you don’t trade. If the market does something unexpected, you adapt and hatch a new plan. You are always thinking ahead, strategizing exactly how will get in and out of trades (based on all the price movement evidence for, or against, your trade)…before the trade is even placed. This is mentally taxing, which is one reason I only trade two hours a day (when I day trade). It is a skill and it takes a lot of work to develop…and maintain (if you don’t trade for a while, you’ll be “rusty”).

Don’t let a losing trade or two throw you off. Focus on what is happening, plan and then jump on opportunities. Keeping the mind busy with important trading tasks will keep your sabotaging emotions at bay.

Some days you may have 8 or 9 trades. Other days only one or two. Some days your stop loss will be 20 pips and your target 35…other days your stop will be 3.5 pips and your target 6. Adapt..and have fun! That ‘ s how to day trade the forex market, the EURUSD, or any forex pair.

Forex day trading 7

How to Determine the Minimum Capital to Start Day Trading Forex.

Cory Mitchell, Chartered Market Technician, is a day trading expert with over 10 years of experience writing on investing, trading, and day trading for publications including Investopedia, Forbes, and others.

Updated on March 26, 2022.

Reviewed by.

Julius Mansa is a CFO consultant, finance and accounting professor, investor, and U.S. Department of State Fulbright research awardee in the field of financial technology. He educates business students on topics in accounting and corporate finance. Outside of academia, Julius is a CFO consultant and financial business partner for companies that need strategic and senior-level advisory services that help grow their companies and become more profitable.

Fact checked by.

Emily Ernsberger is a fact-checker and award-winning former newspaper reporter with experience covering local government and court cases. She also served as an editor for a weekly print publication. Her stint as a legal assistant at a law firm equipped her to track down legal, policy and financial information.

In This Article.

In This Article.

The Balance / Melissa Ling.

It's easy to start day trading currencies, because the foreign exchange (forex) market is one of the most accessible financial markets. Some forex brokers require a minimum initial deposit of only $50 to open an account, while others allow you to open accounts with no initial deposit.

It is possible to take a set amount of capital and begin trading. However, there are several factors to consider when determining how much you need in order to start day trading on the forex market.

Key Takeaways.

Successful forex day trading requires that you accurately predict price changes. You can start day trading forex for as little as $100, but that amount will limit your returns. It’s generally recommended that you use no more than 1% of your account balance on a forex trade. Always enter a stop-loss order to prevent significant losses if the base currency moves in the opposite direction from what you think it will do.

Minimum Capital for Day Trading Forex.

If you must start trading right away, you can begin with $100. For a little more flexibility, $500 can lead to slightly more income or returns. However, $5,000 might be best, because it can help you produce a reasonable amount of income that will compensate you for the time you're spending on trading.

Set amounts don't help you understand the minimum amount required for your trading desires, life circumstances, or risk tolerance. You should understand the risks involved in trading forex and know how to mitigate them.

Note.

The minimum capital you need to start trading is how much you can afford to trade with.

It's also important to know how forex trades are made and what they consist of, so that you can better gauge your ability to withstand losses on your way to making gains.

Understand the Risks.

Since day trading is about trading on price changes, most of the risk is in the form of prices not moving the way you thought they might go. That happens often, so day traders shouldn't risk more than 1% of their forex account on a single trade.

Trading Risks.

Leveraged trading and marginal trading occur when you use forms of debt to fund your trades. Both of these activities significantly increase the amount of risk you take on, and they increase the likelihood of owing much more than you did initially.

Trade risk, regarding the money you risk in one trade and not the risks mentioned previously, is the amount of capital you could lose. It is determined by finding the difference between your entry price and the price at which your stop-loss order goes into effect, multiplied by the position size and the pip value (discussed below).

Risk Management.

While you can use leverage to fund your trades and be successful, the risks are so high that the best way to manage the risks involved is not to use leverage-based trading.

The 1% rule is one of the best methods for mitigating trade risk. If your account contains $1,000, then the most you'll want to risk on a trade is $10. If your account has $10,000, you shouldn't risk more than $100 per trade.

Note.

Even great traders have strings of losses; if you minimize the risk on each trade, a losing streak won't significantly deplete your capital.

Learn Lot Sizes and Pip Values.

When you buy or sell forex, prices move in "pips," and the amounts are sold in lots. The relationship between the two is important for establishing your minimum amount.

Lots.

Forex pairs trade in units of 1,000 (micro), 10,000 (mini), or 100,000 (standard) lots. When USD is listed second in the pair—such as EUR/USD—and you fund your account with U.S. dollars (USD), the value of the pip per type of lot is fixed in USD.

If you hold a micro lot of 1,000 units, each pip movement is worth $0.10. If you hold a mini lot of 10,000, then each pip move is $1. If you hold a standard lot of 100,000, then each pip move is $10.

Pips.

The forex market moves in pips, which stands for " percentage in point or price interest point." A pip is the smallest amount that a currency can change. For instance, in most currency pairs, a pip is 0.0001, which is equivalent to 1/100th of a percent.

If the EUR/USD price changes from 1.3025 to 1.3026, that's a one-pip move. If it changes to 1.3125, that's a 100-pip move.

Note.

Loss or gain from pip movement is calculated by multiplying the pip value by how many pips a currency moves by.

One exception to the pip value "rule" is the Japanese yen. A pip for currency pairs in which the yen is the second currency—called the "quote currency"—is 0.01, equivalent to 1%.

Create Stop-Loss Orders.

When trading currencies, it's essential to enter a stop-loss order. Stop-loss orders automatically prevent significant losses if the base currency moves in the opposite direction of your bet. A simple stop-loss order could be 10 pips below the current price when you expect the price to rise, or 10 pips above the current price when you expect it to fall.

This method depends upon the amount you've limited yourself to trade with. A stop loss of 10 pips below could be a significant amount of money—if one EUR/USD pip costs $10, a 10-pip move downward could cost you $100 on one standard lot.

Determine Your Minimum Capital for Trading.

It helps to see how different trading amounts can influence your minimum amount for day trading. The previous examples of $100, $500, and $5,000 are excellent for seeing the differences and working through the calculations to find your limit.

$100 in the Account.

Suppose you open an account for $100. You will want to limit your risk on each trade to $1 (1% of $100).

If you place a trade in EUR/USD, buying or selling one micro lot, your stop-loss order must be within 10 pips of your entry price. Since each pip is worth $0.10, if your stop loss were 11 pips away, your risk would be $1.10 (11 x $0.10 x 1), which is more risk than your strategy allows for.

$500 in the Account.

Now suppose you were to open an account with $500. You can risk up to $5 per trade and buy multiple lots. For example, you can set a stop-loss 10 pips away from your entry price and buy five micro-lots. You'd still be within your risk limit, because 10 pips x $0.10 x 5 micro lots = $5.

If you were to choose to place a stop-loss 25 pips away from the entry price, you could buy two micro-lots to keep the risk on the trade below 1% of the account. You would buy only two micro-lots, because 25 pips x $0.10 x 2 micro lots = $5.

Starting with $500 will provide greater trading flexibility and produce more daily income than $100, but most day traders will still be able to make only $5 to $15 per day off that amount with any regularity.

$5,000 in the Account.

If you were to start with $5,000, you have even more flexibility and can trade mini-lots as well as micro-lots. If you buy the EUR/USD at 1.3025 and place a stop loss at 1.3017 (eight pips of risk), you could buy six mini-lots and two micro-lots.

Your maximum risk would be $50 (1% of $5,000), and you could trade in mini lots, because each pip is worth $1, and you would have chosen an eight-pip stop-loss. Divide the risk ($50) by (8 pips x $1) to get 6.25 for the number of mini-lots you could buy without exceeding your risk. You would break up 6.25 mini-lots into six mini-lots (6 x $1 x 8 pips = $48) and 2 micro-lots (2 x $0.10 x 8 pips = $1.60), which would put a total of only $49.60 at risk.

With this amount of capital and the ability to risk $50 on each trade, the income potential moves up, and traders can potentially make $50 or more per day, depending on their forex strategy and price changes.

Frequently Asked Questions (FAQs)

How many hours of trading do you need to do in a day to make money in forex markets?

Some day traders may only spend a couple of hours actually trading forex, while others will spend four or more hours. However, that doesn't include time spent researching, reviewing trades, and establishing trade plans.

How much trading volume does forex do in a day?

More than $6 trillion changes hands every day on the forex market. That's a total across all currencies, not just the U.S. dollar.

Which is better for day trading, stocks or forex?

Every trader needs to find their own "edge," a special focus that gives them a leg up over other traders. The only way to tell whether you have a better edge in stocks or forex is to try them both. Some barriers to stock day trading could make forex day trading more accessible to traders, such as the pattern day trading minimum equity requirement, but that doesn't make one market "better" than the other.

Forex day trading 6

Day Trading 2023 – How To Start.

DayTrading.com is the top international guide to online day trading in 2023. Beginners who are learning how to day trade should read our many tutorials and watch how-to videos to get practical tips for online trading. Experienced intraday traders can explore more advanced topics such as automated trading and how to make a living on the financial markets.

Read why you can trust the information on DayTrading.com.

Quick Search.

Do you want to trade as soon as possible, but don't know how to get started? Use the Quick Start Guide!

How to Start Trading Now.

Trade Forex with top rated broker Vantage, which has been selected based on its high rating and your location.

Why Forex? Forex is the biggest trading market in the world and also the most commonly used by new traders. You can trade 24 hours a day, 6 days a week, which makes it ideal for trading from home even if you have a daytime job.

Recommended Broker.

The High Reward / Risk Alternative.

If you accept more risk, products like binary options and CFDs can return close to 100% on a single successful trade with top broker Pocket Option. These products can be used on the forex markets for 24/6 access and results are achieved in minutes rather than hours.

Recommended Broker.

Want more options? Go to the broker comparison to list and filter all trading brokers.

Top 3 Brokers in Ukraine.

AvaTrade.

Leading forex and CFD broker since 2006, regulated in Ireland, Australia, Canada, Japan, Abu Dhabi, and South Africa. AvaTrade offers multiple trading platforms, including MT4/5, Web Trader, Mobile App, Vanilla options and Social Trading. +1250 Financial Instruments, Educational content and multilanguage customer support active 24/7. 20% Welcome bonus available on allowed countries.

Vantage.

Reliable and affordable trading since 2009. Join over 900,000 others trading on 1000+ CFD products. Trade Forex CFDs from 0.0 spreads on our RAW account through TradingView, MT4 or MT5. Vantage is ASIC regulated and client funds are segregated. Open an account less than 2 minutes.

Deriv.com.

Deriv.com offers CFDs and multipliers with 1:1000 leverage. Get access to volatility indices exclusively at Deriv.

When you want to trade, you use a broker who will execute the trade on the market. The broker you choose is an important investment decision. Below are some points to look at when picking one:

Speed of execution – Due to the high number of trades you might make in a day, speed of execution is important – as is getting the price you need, when you need it. Costs – The lower the fees and commission rates, the more viable day trading is. Active traders will be trading often – minimising these trading costs it vital Regulatory compliance – Make sure your broker is regulated. They will be legally obliged to protect your financial interests. Support – Whatever your day trading strategy, you’ll probably need assistance at some point, so look for online brokers with quick response times and strong customer support. Spreads, Leverage & Margin – As a day trader you want competitive spreads – you might also want certain leverage levels and low margins. Trading Platforms – Does it suit your needs? From a stop loss to a limit order and advanced charting, the trading platform needs to deliver the tools and features you want. Assets and Markets – A forex trader wants to trade different assets than someone stock trading. Brokers cater for different markets so you need to know you can trade the correct currency pairs or stocks and equities.

Do your research and read our online broker reviews first. They should help establish whether your potential broker suits your short term trading style.

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What Is Day Trading?

The definition of “day trading” is the buying and selling of a security in a single trading day. If you’re day trading online you will close out your position before the markets close for the day to finalise the result of the trade. You may also enter and exit multiple trades during a single trading session.

Brokers on occasion have different definitions for ‘active’ or day traders. Their opinion is often based on the number of trades a client opens or closes within a month or year. Some brands even refer to ‘hyper-active traders’ – a step beyond the ‘active trader’.

Day trading is normally done by using trading strategies to capitalise on small price movements in high-liquidity stocks or currencies.

The purpose of DayTrading.com is to give you an overview of day trading basics and what it takes for you to make it as a day trader. From scalping a few pips profit in minutes on a forex trade, to trading news events on stocks or indices – we explain how.

What Can Be Traded?

Day traders have access to multiple markets and ways to speculate on price movements. If you’re S&P 500 day trading, you’ll be buying and selling the shares of companies, such as Tesla, Facebook or Microsoft. In the day trading forex market, you’ll be trading currencies, such as the Euro, U.S dollar and GBP.

Index funds frequently occur in financial advice these days, but are slow financial vehicles that make them unsuitable for daily trades. They have, however, been shown to be great for long-term investing plans.

Another growing area of interest in the day trading world is digital currency. Day trading with Bitcoin, LiteCoin, Ethereum and other altcoins currencies is an expanding business. With lots of volatility, increasing trade volume and an unpredictable future, day trading in cryptocurrency could be an exciting avenue to pursue.

The most popular day trading markets and instruments today are:

Forex.

Forex trading is done on the foreign exchange currency market, which is the world’s most popular and liquid financial market. The massive volume of trades on the forex markets make them very attractive for day traders. There are multiple short-term opportunities in a trending currency pair, and an unrivalled level of liquidity to ensure opening and closing trades is quick and slick.

More suited to technical analysis, there are other ways to trade foreign exchange. In addition, forex has no central market. This means that forex brokers can offer currency trading six days a week, 24 hours a day.

They present a great starting point for entry level or aspiring traders with full time jobs.

Stocks.

Stock trading involves buying and selling physical stocks in individual companies, regular and Leveraged ETFs (an “Exchange Traded Fund” holds multiple stocks or commodities and is traded like a single stock), futures, and stock options.

Trading stocks intraday offers different opportunities than a traditional ‘buy and hold’ strategy. Speculating on stock prices via CFDs or spread betting for example, mean traders can trade on falling prices too. Margin or leverage also reduce the capital required to open a position – but also increase risk.

So you can take a position on the latest news release, product announcement or financial report – as well as technical indicators.

Cryptocurrency.

Trading cryptocurrencies – such as Bitcoin and Ethereum – has become immensely popular due to their price volatility. Spectacular growth has seen cryptos attract many new investors. Brokers are also ensuring retail access to these markets is easier and easier with constant innovation.

Taking a view on any of these new blockchain based currencies is being simplified all the time. Barriers to entry are now almost nil, so whether you are a bull or a bear, now is the time.

Binary Options.

Binary Options are the simplest and most predictable financial instruments, as the timing and return on a successful trade are known in advance. A trader only has to determine whether the price will be higher or lower after a set amount of time, e.g 1 minute?

With the downside limited to the size of the trade, and the potential payout known in advance, understanding how binary options trading works is not difficult.

Futures.

Futures trading is about speculating in the future price of a commodity or security. For example, an airline company might secure future access to fuel at a specific price, if they fear that prices might go up. If the fuel price does indeed go up, the price of the futures contract would also go up, and thus these contracts can be used for short-term trading.

Commodities.

When trading commodities you speculate on the current (or future) price of oil and natural gas, food stuffs, metals and minerals like gold. Trading in commodities is one of the oldest financial markets and still enormously popular.

Getting Started.

Recent reports show a surge in the number of day trading beginners. But unlike the short term trading of the past, today’s traders are smarter and better informed, in part due to trader academies, courses, and resources, including trading apps.

Daytrading.com exists to help novice traders get educated and avoid mistakes while learning how to trade intraday.

Day trading 101 – get to grips with trading stocks or forex live using a demo account first, they will give you invaluable trading tips, and you can learn how to trade without risking real capital.

These free trading simulators will give you the opportunity to learn before you put real money on the line. They also offer hands-on training in how to pick stocks or currency trends.

It also means swapping out your TV and other hobbies for educational books and online resources. Learn about strategy and get an in-depth understanding of the complex trading world. DayTrading.com is the ideal beginners guide to day trading online.

Books for Beginners.

‘Day trading and swing trading the currency market’, Kathy Lein ‘Day Trading for Dummies’, Ann Logue.

Both books will provide you with the basic day trading rules to live by. You’ll also benefit from advice on stock picks, plus creative strategy ideas. As Benjamin Franklin highlighted, ‘ an investment in knowledge pays the best interest ’.

While the ‘for dummies’ series of books are very accessible, it will be helpful to broaden the depth of trading literature you try – More on day trading books.

Patterns And Technical Analysis.

Day trading chart patterns paint a clear picture of trading activity which helps you to decipher individuals’ motivations. They could highlight s&p day trading signals for example, such as volatility, which may help you predict future price movements.

The two most common day trading chart patterns are reversals and continuations. Whilst the former indicates a trend will reverse once completed, the latter suggests the trend will continue to rise.

Understanding these trading patterns, as well as ‘triangles’, ‘head and shoulders’, ‘cup and handle’, ‘wedges’ and plenty more, will all make you better informed when it comes to employing your trading strategies.

Day Trading Strategies.

Head over to websites like Reddit and you’ll see many trading newcomers who will often fall at the strategy hurdle, taking the first momentum examples they see and losing money left and right.

Savvy traders will employ day trading strategies in forex, grain futures and anything else they’re trading in, to give them an edge over the market. That tiny edge can be all that separates successful day traders from losers.

There are a number of day trading techniques and strategies out there, but all will rely on accurate data, carefully laid out in charts and spreadsheets. Options include:

Swing trading Scalping Trading zones Trading on volume Arbitrage trading A simple day trading exit strategy Utilising news.

It is those who stick religiously to their short term trading strategies, rules and parameters that yield the best results. Too many minor losses add up over time.

Trading Accounts.

Part of your day trading setup will involve choosing a trading account. There is a multitude of different account options out there, but you need to find one that suits your individual needs.

Cash account – Day trading with a cash account (also known as without margin), will allow you to only trade the capital you have in your account. This limits your potential profits, but it also prevents you losing more than you can afford. Margin account – This type account allows you to borrow money from your broker. This will enable you to bolster your potential profits, but also comes with the risk of greater losses and rules to follow. If you want to start day trading with no minimum this isn’t the option for you. Most brokerage firms will insist you lay down a minimum investment before you can start trading on margin. You can also experience a margin call, where your broker demands a greater deposit to cover potential losses.

The brokers list has more detailed information on account options, such as day trading cash and margin accounts. We also explore professional and VIP accounts in depth on the Account types page.

Terminology.

Learn the trading lingo and vocabulary and you’ll unlock the door to a whole host of trading secrets. Below we have collated the essential basic jargon, to create an easy to understand day trading glossary.

General.

Leverage rate – This is the rate your broker will multiply your deposit by, giving you buying power. Automated trading – Automated trading systems are programs that will automatically enter and exit trades based on a pre-programmed set of rules and criteria. They are also known as algorithmic trading systems, trading robots, or just bots. Initial Public Offering (IPO) – This is when a company sells a fixed number of shares to the market to raise capital. Float – This is how many shares are available to trade. If a company releases 10,000 shares in the initial IPO, the float would be 10,000. Beta – This numeric value measures the fluctuation of a stock against changes in the market. Penny Stocks – These are any stocks trading below $5 a share. Profit/Loss ratio – Based on a percentage basis, this is the measure of a system’s ability to generate profit instead of loss. Entry points – This is the price at which you buy and enter your position. Exit points – This is the price at which you sell and exit your position. Bull/Bullish – If you take a bullish position day trading you expect the stock to go up. Bear/Bearish – If you take a bearish position you expect the stock to go down. Market trends – This is the general direction a security is heading over a given time frame. Hotkeys – These pre-programmed keys allow you to enter and exit trades rapidly, making them ideal if you need to exit a losing position as soon as possible.

Charts, Graphs, Patterns & Strategy.

Support level – This is the price level where the demand is strong enough that it prevents the decline in price past it. Resistance level – This is the price level where the demand is strong enough that selling the security will eradicate the increase in price. Moving Averages – They provide you with vital buy and sell signals. Whilst they won’t tell you in advance if a change is imminent, they will confirm if an existing trend is still in motion. Use them correctly and you can tap into a potentially profitable trend. Relative Strength Index (RSI) – Used to compare gains and losses over a specific period, it will measure the speed and change of the price movements of a security. In other words, it gives an evaluation of the strength of a security’s recent price performance. Day trading tip – this index will help you identify oversold and overbought conditions in the trading of an asset, enabling you to steer clear of potential pitfalls. Moving Average Convergence Divergence (MACD) – This technical indicator calculates the difference between an instruments two exponential moving averages. Using MACD can offer you straightforward buy and sell trading signals, making it popular amongst beginners. Bollinger Bands – They measure the ‘high’ and ‘low’ of a price in relation to previous trades. They can help with pattern recognition and enable you to arrive at systematic trading decisions. Vix – This ticker symbol for the Chicago Board Options Exchange (CBOE), shows the expected volatility over the next 30 days. Stochastics – Stochastic is the point of the current price in relation to a price range over time. The method aims to predict when prices are going to turn by comparing the closing price of a security to its price range.

If you stumble across a word or phrase that leaves you scratching your head, refer back to this day trading dictionary and chances are you’ll get a quick and easy explanation.

Read the glossary for definitions of many more words and concepts.

Day Trading vs The Alternatives.

Yes, you have day trading, but with options like swing trading, traditional investing and automation – how do you know which one to use?

Swing trading – Swing traders usually make their play over several days or even weeks, which makes it different to day trading. It can still be a good method for the trader who wants to diversify. Traditional investing – Traditional investing is a longer game and looks to put money in popular assets such as stocks, bonds, and real estate for long-term value appreciation. Realistic investment returns over a whole year are in the 5-7% range. Unless you are already rich and can invest millions, traditional investing returns too little to make much of a difference on a daily basis. However, the intelligent trader will also invest long-term. Robo-advisors – An increasing number of people are turning to robo-advisors. You simply chose an investing profile, then punch in your degree of risk and time frame for investing. Then an algorithm will do all the heavy lifting. This is normally a long-term investing plan and too slow for daily use. Signals – Many service providers now offer reasonably priced trading signals. Look for verified results before subscribing.

Day trading vs long-term investing are two very different games. They require totally different strategies and mindsets. Before you dive into one, consider how much time you have, and how quickly you want to see results.

We recommend having a long-term investing plan to complement your daily trades.

Day Trading From Home.

So you want to trade full time from home and have an independent trading lifestyle? If so, you should know that this requires specialist tools and equipment to give you the necessary edge.

You also have to be disciplined, patient and treat it like any skilled undertaking.

Analytical Software.

Whilst it may come with a hefty price tag, day traders who rely on technical indicators will rely more on software than on news. Whether you use Windows or Mac, the right trading software will have:

Automatic Pattern Recognition – Identifies flags, channels, and other indicative patterns, Genetic and Neural Applications – Profit from neural networks and genetic algorithms to better predict future price movements. Broker integration – With direct links to brokerages, you can automatically execute trades, removing emotional distractions and streamlining the execution process. Backtesting – Applies strategies to previous trades to demonstrate how they would have performed. This enables traders to better understand how particular trading methods may perform in the future. Multiple news sources – Online newsfeeds and radio news alerts play an integral part in day trading. As Kofi Annan rightly asserted in one of the most prudent trading quotes, ‘knowledge is power’. The more you know, the quicker you can react, and the quicker you can react, the more day trading profits you might make.

Psychology.

If you’re trading as a career you have to master your emotions. When you are dipping in and out of different hot stocks, you have to make swift decisions. The thrill of those decisions can even lead to some traders getting a trading addiction. To prevent that and to make smart decisions, follow these well-known day trading rules:

Controlling fear – Even the supposedly best stocks can start plummeting. Fear then sets in and many investors liquidate their holdings. Now whilst they prevent losses, they also wave goodbye to potential gains. Recognising that fear is a natural reaction will allow you to maintain focus and react rationally. ‘Pigs get slaughtered’ – When you’re in a winning position, knowing when to get out before you get whipsawed or blown out of your position isn’t easy. Tackling your own greed is a hurdle, but one you must overcome.

Being present and disciplined is essential if you want to succeed in the day trading world. Recognising your own psychological pitfalls and separating your emotions is imperative.

Education.

DayTrading.com exists because we could not find a reliable day trading school, university, academy, or institute that runs classes where you can get an all-inclusive day trading education. This site should be your main guide when learning how to day trade, but of course there are other resources out there to complement the material:

Podcasts Blogs Online day trading courses Practice game apps Books Ebooks Audiobooks Seminars Journals Message boards like Discord Forums Chat rooms (always free) Newsletters Pdf guides.

For the right amount of money, you could even get your very own day trading mentor, who will be there to coach you every step of the way. Opt for the learning tools that best suit your individual needs, and remember, knowledge is power. The ‘ Day Trading For Dummies ‘ books are not your only option!

So what do you need to consider to day trade successfully?

7 Secrets To Success.

Whether you’re looking for jobs you can do from home, or you want to start day trading as a hobby, follow these seven essentials.

1. Setting Up.

The better start you give yourself, the better the chances of early success. That means when you’re sat at your desk, staring at your monitors with hands dancing across your keyboard, you’re looking at the best sources of information.

That means having the best trading platform for your Mac or PC laptop/desktop, having a fast and reliable asset scanner and live stream, and software that won’t crash at a pivotal moment.

2. Keep It Simple.

This is especially important at the beginning. You might be interested in s&p 500, mutual funds, bond futures, Nasdaq, Nasdaq futures, blue-chip stocks, equities, or the Dax 30, but to start with focus on only one. Get good at forecasting one market/security before you branch out. The other markets will wait for you.

3. Be Realistic.

The movies may have made it look easy, but don’t be fooled. Even the day trading gurus in college put in the hours. You won’t be invited to join that hedge fund after reading just one Bitcoin guide. You need to order those trading books from Amazon, download that spy pdf guide, and learn how it all works.

4. Risk Management.

This is one of the most important lessons you can learn. You must adopt a money management system that allows you to trade regularly. Is day trading really worth it if you’ll be broke by the end of the first month?

History has shown that many successful traders never risk more than 1% of their account balance on a single trade. So, if you had $25000 or £25000 in your account, you’d only risk $250 / £250 on a single trade.

Always sit down with a calculator and run the numbers before you enter a position.

5. Keep A Record.

One of the day trading fundamentals is to keep a tracking spreadsheet with detailed earnings reports. If you can quickly look back and see where you went wrong, you can identify gaps and address any pitfalls, minimising losses next time.

6. Timing.

Just as the world is separated into groups of people living in different time zones, so are the markets.

If you start trading on the CAC 40 at 11:00 ET, you might find you’ve missed the best entry signals of the day already, minimising your potential end of day profit. So, if you want to be at the top, you may have to seriously adjust your working hours.

7. Sensible Decision Making.

When you start day trading you’ll have a host of difficult decisions to make. Should you be using Plus500? What about day trading on Coinbase? Do you have the right desk setup? Where can you find an excel template? How do you set up a watch list? The meaning of all these questions and much more is explained in detail across the comprehensive pages on this website.

You can also find more detailed and comprehensive lessons in our top tips.

Taxes.

The tax situation for day traders is entirely dependent on in which country the trader is “tax resident”. Furthermore, a popular asset such as Bitcoin is so new that tax laws have not yet fully caught up – is it a currency or a commodity?

How you will be taxed can also depend on your individual circumstances. For example, in the UK the HMRC are known to approach day trading activities from 3 different angles:

Speculative/similar to gambling activities – Day trading profits would likely be totally free from income tax, business tax, and capital gains tax. Substantial self-employed trading activity – Likely to be subject to business tax. Significant activities of a private investor – Gains and losses would fall under the remit of the capital gains tax regime. Paying just business tax would be highly illegal and open you up to serious financial penalties.

Due to the fluctuations in day trading activity, you could fall into any three categories over the course of a couple of years. Although you don’t need a license, it’s important you rigorously monitor your trades, seek tax advice, and stay within laws and regulations when filing your tax returns.

Read the Guide to Day Trading Taxes for more comprehensive information on tax rules and reporting.

How Much Money Will You Make?

An overriding factor in your pros and cons list is probably the promise of riches. We’ve all heard stories of day trading millionaires who started trading with just 1000 dollars, but soon hit the jackpot and mastered the markets. Whilst, of course, they do exist, the reality is, earnings can vary hugely.

Being successful day trading will depend on your commitment, your discipline, and your strategy. All of which you can find detailed information on across this website.

The real day trading question then, does it really work? If you’re willing to invest the time and energy, then for you, it could well do.

Forex day trading 5

Forex Day Trading Explanation with Strategies.

Forex day trading involves buying and selling foreign currency pairs during the trading day to profit from intraday price movements without holding any open positions overnight. Traders who execute intraday trades are called day traders or intraday traders. Forex day traders commonly use different trading strategies, such as trend trading, countertrend trading, range trading, breakout trading, and news trading, to capitalize on intraday price moves.

Is forex good for day trading?

The forex market provides day traders with several advantages over trading shares on the stock market. Traders do not have to pay commission, exchange fees, brokerage fees, and government fees, which stock day traders usually pay. So, by trading forex, forex day traders can lower their trading costs.

Day traders often use leverage to maximize their gains, and forex brokers easily provide leverage as high as 100:1 or 50:1. Such high leverage is usually not available for stock traders; the maximum leverage allowed to traders in the stock market is either 2:1 or 4:1 for pattern day traders.

The forex market is extremely liquid with an enormous number of buyers and sellers available at any point in time. Because day traders open and close trades in a short span, they require highly liquid markets to carry out intraday trades and make a profit from short price movements.

To be eligible for day trading in the stock market, you need to have a minimum equity balance of $25,000. In contrast, there are no minimum balance requirements for trading forex. Many forex brokers allow you to open a forex trading account with as little as $50. The low minimum balance requirement allows even undercapitalized traders to start forex day trading.

How does forex day trading work?

Forex day trading is similar to stock trading, except that the former involves buying and selling currency pairs instead of company shares. In other words, you sell one currency and buy the other one simultaneously in the pair.

Each currency pair has a base currency and a quote currency. The base currency is the first currency in the price quote and is always equal to 1, whereas the second currency in the price quote is called the "quote currency." For example, in the EUR/USD price quote of 1.0209, the euro is the base currency and the USD is the quote currency. The price quote denotes that 1 euro equals 1.0209 U.S dollars.

If you buy the EUR/USD currency pair, you actually buy the base currency, which, in our case, is the euro. You are selling the quote currency, the USD. Conversely, if you sell the EUR/USD currency pair, you sell the base currency, the euro, and buy the quote currency, the USD.

The prices of currency pairs are quoted in the bid and ask prices. The bid price is the price at which you can sell the base currency in a currency pair in exchange for the quote currency. This is the price at which your broker or another trader is willing to buy the base currency from you in exchange for the quote currency.

Conversely, the asking price is the price at which you can buy the base currency in a currency pair in exchange for the quote currency. At this price, your broker or another trader is willing to sell the base currency to you in exchange for the counter currency.

How much do forex traders make a day?

Your forex trading profits depend on a lot of factors, including your trading strategies, risk management techniques, and your initial capital. Theoretically, if your winning trades exceed your losing trades, assuming your winning trades make more than your losing trades, you can be a profitable trader. While determining the exact dollar amount is difficult, one can assume that if you have more than a 50% win rate and your winning trades earn more than your losing trades, you can expect to earn at least a 20% return per month on your initial capital because of the leverage.

Forex day-trading rules.

The Financial Industry Regulatory Authority (FINRA) has pattern day trading rules in place for stock traders. The rules outline certain conditions, such as the minimum equity requirements, which pattern day traders must meet to continue day trading stocks. However, these rules do not apply to forex trading, and forex traders can freely day-trade without worrying about meeting the minimum equity requirements.

Still, forex traders need to follow the general rules related to forex trading, such as initial margin requirements, maintenance margin, and margin calls. Many brokers allow you to trade with a 1% margin, which means that you can open trades worth 100 times more than the amount you have in your trading account.

For example, if you have $1,000 in your margin account, you can open trades worth $100,000. The 1% margin is called the initial margin, which determines the amount you must have before initiating a trade. In our example above, if you wanted to open a trade worth $100,000, you must have 1% of the total position’s value ($100,000 x 1%) = $1,000 in your account to initiate the trade.

The maintenance margin is usually 50% to 75% of the initial margin, which means that if you have opened a trade with the initial margin in your account, you’ll have to keep around 50% to 75% of your initial margin in your account. If you suffer losses on your position and your account value drops below the maintenance margin amount, you’ll get a margin call from your broker. When your broker raises a margin call, you’ll have to deposit additional money into your account to bring your account balance back to the maintenance margin amount.

What is a pip in forex?

A pip is short for percentage in point, which determines the change in the value of a currency in relation to the second currency in a currency pair. It is the smallest movement a currency pair can make. For example, if the price of the EUR/USD currency pair changes from 1.0191 to 1.0196, the 0.0005 change in price would be equal to 5 pips. One pip for all currency pairs that are quoted up to 4 decimal points is equal to 0.0001, or 1/100 of a percentage point. The cash value of a pip depends on the currency pair and its pip value.

What is a lot in forex?

A lot in forex refers to the number of currency units a trader buys or sells. For example, the standard size lot has 100,000 units of currency. The following table describes different lot sizes, along with their equivalent units of currencies, available to traders in the forex market:

Lot Number of Currency Units Standard 100,000 Mini 10,000 Micro 1,000 Nano 100.

What is a spread in forex?

In forex, spread refers to the difference between the bid and ask price of a currency pair. For example, if the bid price of the EUR/USD is 1.0187 and the asking price is 1.0182, the spread would be the difference between the bid and ask price, which is $0.0005 for trading a single unit of currency. Forex brokers mostly don’t charge commissions but charge spreads as compensation for their services.

The asking price is always higher than the bid price because brokers or market makers will always sell at a higher price (ask price) and buy from you at a lower price (bid price). Average spreads on the most liquid, major currency pairs such as the EUR/USD, and GBP/USD are very low, while they are higher for comparatively less liquid currency pairs.

What is forex scalping?

Scalping is an intraday trading strategy in which traders quickly go in and out of trades to generate quick profits from small price movements. Because scalpers capitalize on small price movements - between five to ten pips per trade - they use leverage, open large positions, and trade frequently to turn small gains into sizable profits.

Forex scalpers use technical analysis and analyze short-term price action to generate trading signals. Based on the trading signals, they make their buy or sell decisions. Scalpers mostly use one-minute and tick charts to find trading signals. Some scalpers also capitalize on potential external market triggers, such as the release of important economic data, monetary policy announcements, and news.

Three best forex scalping strategies.

Here are the three best forex scalping strategies that you can learn and apply to your trading:

1 - Breakout Scalping Strategy.

A breakout on a price chart occurs when the price moves out of a range, piercing either the support or resistance level. Before the breakout, the price usually makes a few unsuccessful attempts at breaking the support or resistance levels on a 30-minute chart. When the price again reaches near the support or resistance level, traders confirm whether the price momentum is backed by an increase in volume. The confirmation is necessary as the breakout could be fake, with the price reverting to the previous range.

If the price momentum is backed by a jump in volume, the breakout could be real and the trader can continue with the trade. A long trade is initiated if the price breaks the resistance level, whereas short trade is placed when the price breaks the support level.

2 - Reversal Scalping Strategy.

The reversal scalping strategy involves identifying and capitalizing on reversal or retracements in short-term price trends. Because predicting troughs and peaks accurately are quite difficult, traders try to find short-term pullbacks and trade them to make small, quick profits. The risk in executing such trades is limited as they aim to profit from minor pullbacks.

To confirm the onset of pullbacks and retracements, traders use momentum oscillators, such as the Stochastic Oscillator and Relative Strength Index (RSI). The Stochastic oscillator is particularly useful in determining the strength of price action and depicts overbought and oversold conditions.

The RSI oscillator can also be used to determine levels where price action shows weakness. Generally, RSI readings above 70 show overbought levels and one can anticipate the onset of weakness from this level. If the price level moves to the 90 RSI level, this could be an even stronger sign of an imminent reversal. The trader can put a short trade and place a stop loss a few pips above the entry point. This would be a high probability trade as the Stochastic and RSI oscillators could give you reasonable hints of a reversal or pullback from which you can make a profit.

3 - Range-Trading Scalping Strategy.

Range-trading scalping strategy works best in ranging markets. To execute this strategy, you need to plot support and resistance lines on a higher time frame price chart to determine whether the price is trading in a range. If it is confirmed that the market is indeed trading in a range, you can expect the price to bounce off the support and resistance levels. You need to monitor the trading volume when the price nears the support or resistance levels to predict the movement of price. For example, a significant spike in trading volume near the support or resistance level could confirm a breakout. In contrast, no unusual change in trading volume near those levels could imply that the price would continue in the range.

You can place a buy-limit order if the price reaches the support level because you expect the price to bounce back and continue to the resistance level. You can also place your stop-loss just beneath the support level, allowing you to make a significant profit at low risk.

What is hedging in forex?

Hedging in forex is a risk management strategy that is used to protect the gains or limit the losses on an open forex position. Traders use hedging techniques to protect their positions from abrupt market moves. To hedge a position, a trader can either open an inverse or opposite position to their existing position in the same currency pair. Alternatively, some traders buy forex options as part of their hedging strategy.

Day Trading Forex Summary.

Day trading forex can be a profitable activity if you learn the ins and outs of forex trading. Thankfully, you can start day trading forex with very little capital, and you don’t have to face pattern day trading restrictions applied to stock day traders. If you are undercapitalized, you can also get leverage or a loan from your broker to open large trades. However, leverage can magnify your gains as well as losses, so you should be careful using it.

Many forex day traders adopt forex scalping strategies, which are used to profit from small movements by quickly moving in and out of trades. If you want to learn forex day trading, you can consider opening a demo account with a broker and try different forex trading strategies to test their effectiveness. With the passage of time, you’ll gain experience and become a markedly better trader.

Forex Serra

Empowering Profitable Traders Since 2012.

AudaCity Capital is your Forex Proprietary Trading Firm.

What is a Forex Proprietary Trading Firm?

Many traders have either heard of the forex proprietary trading firm or forex funding trader program but are confused with the two terms. They are like the same thing, and their purpose is to fund traders with the right amount of capital. This allows traders to have enough leverage to use for trading. The proprietary firm typically uses its capital to create profits. It does this by hiring a prop trader who operates as the company’s contractor. When he makes profits, he will receive a certain percentage, and the prop company will take care of the rest depending on the agreement. The proprietary firm can invest in various things in the market, including forex, stocks, bonds, commodities, and derivatives. This means that you can join a remote forex prop firm and choose any field depending on your experience and expertise. Here in Audacity Capital, we are your proprietary firm where you can learn and improve your forex trading performance.

How to Join Audacity Capital’s Forex Proprietary Trading Firm.

We are looking for talented and ambitious traders with a proven strategy who are ready to take their trading to the next level. We provide the necessary funding and resources to help shape a better future for our traders. Our firm offers all traders an equal opportunity to trade in the comfort of their homes and get access to funding in a few easy steps. Apply here directly or read more about our best Forex Funding Programs.

How it works.

Apply to the Program.

You can apply to the Funded Trader Program by filling out the form. It is important that you complete the correct contact details in order for our Talent Acquisition team to contact you.

One of our Talent Acquisition team members will contact you to schedule an interview via phone or face-to-face. Our team will ask questions about your trading experience and strategy.

Based on your interview, our risk management team will assess whether you are a good fit for the program. If you are accepted you will receive an email that will contain a contract for you to sign as well as the payment details for the fees.

Once you have completed payment and signed the contract, you will be sent the trading account login details immediately via email.

What we offer.

Our Funded Trader Program uniquely offers a fully-funded live trading account starting with $15,000 and scaling up to $500,000. We encourage a partnership built on transparency, respect, and fairness with our traders. Therefore, we split the profits fairly 50/50 and use a liquidity provider that benefits our traders to have tight spreads and no fees on commissions or swaps. The program provides a fast scaling plan, where we double the capital every time the trader hits the 10% target. We also offer a 10% absolute drawdown, which is not trailing from the profits, where the trader is not liable for any losses.

If you get approved for The Funded Trader Program there is no need to waste time on a demo account. You start trading live from day one with our capital.

We make our profits from our traders success, we share profits 50/50 fairly.

We double the size of the trading account every time you reach a 10% target.

The drawdown is 10% on the initial balance and you’re not liable for any losses.

We use a liquidity provider that allows us to give our traders access to a deep liquidity in the market with fast executions and tight spreads. Our monthly subscription covers the benefit of not having to pay commissions or swaps.

I was looking to get funded and did my research into prop trading firms. I chose Audacity Capital because they provided real money straight away, and I was right to choose them because I was able to hit my target and withdraw my profits in a few months.

Marcin — Poland.

There are many advantages that come with working with Audacity. One that comes to mind immediately is the fact that I am much more responsible with the funds that I am managing. Because I know that the funds don’t belong to me and they belong to Audacity and I want to give the best performance possible.

Megiliano — Greece.

Trading on a funded account is different from trading on a personal account. I had to adapt my strategy and disconnect my emotions because the conditions are different.

Monir — India.

I’m glad I can follow Audacity Capital’s risk parameters because it helps me in the game of trading. At the end of the day, you need to survive in the market and adjust, and trading in bigger account sizes that they offer allowed me to be really profitable.

Vladislav — Bulgaria.

I used to trade commodities where there are high fluctuations, and the problem I had was I used to use very high leverage and I used to get stocked out in the past. But when I joined Audacity Capital because the leverage was low compared to what I am used to in my own account, which ended up as a lesson for me to have stable funds.

David — South Korea.

From a really young age, I would get really angry and break my control and blow accounts. But this changed in the past 2 years when I put myself in the right frame of mind and have the right risk management. So when I lose a trade, I’m not upset because I know that I’ve only lost what I can afford to lose.

Shahriyar — United Kingdom.

Audacity Capital in numbers.

2.4 B Volume Traded 2.82 M Max Monthly Payout 140 + Countries.

As seen on.

Things to consider when choosing an FX Prop Trading Firm.

Reputation.

It is crucial to look at the legitimacy of a prop trading firm when choosing a long term funding partner. Factors that can help determine a firm’s reputation are reviews, press features, awards, etc. Platforms such as Trustpilot and YouTube showcase a firm’s value from the opinion of people using the services of the firm.

Trading accounts may come with restrictions. Reading through the account’s rules and trading guidelines will help determine whether they align with your strategies. We advise that you contact a support consultant to confirm. Remember to consider a firm’s objectives when looking at their trading conditions.

It is essential to look at the program and the firm’s expectations. Does it align with your goals? Every firm is different.

Some Prop firms have a growth plan that allows funded traders to multiply their funds and enjoy increased profits.

Consider if there are any hidden costs. You can compare the fees with their restrictions to decide whether it is worth trading with the firm.

Why use a Proprietary Firm to trade?

Trade with Huge Capital.

As an exclusive prop firm, we provide our traders with up to half a million US Dollars of trading capital and use real money from day one. We also offer a fast-scaling plan by doubling the size of the trading account once the trader hits the 10% target. We want to give you a real chance to demonstrate your ability.

Our reputation comes from valuing trust and fairness. We split the profits 50/50 to promote financial satisfaction and secure your knowledge that we are truly invested in your success.

We have developed a community app that can be downloaded from google play or apple store to bring like-minded professionals together. This means you can interact and benefit from market analysis and new strategies. We also use the app to announce events and promotions.

We believe in a fair process and meaningful trading, you will have the flexibility to make money anywhere in the world at any given time. We do not limit our traders to minimum trading days or deadlines and we use an institutional liquidity provider where you can benefit from tight spreads and no fees on commissions or swaps.

We provide a 10% absolute drawdown, which does not trail the trader’s profits. Within this limit, you are not liable for any losses. Therefore, you won’t owe the company any money.

We use a liquidity provider that allows us to give our traders access to a deep liquidity in the market with fast executions and tight spreads. Our monthly subscription covers the benefit of not having to pay commissions or swaps.

Forex day trading 4

Day Trading vs Forex: What's the Difference?

Day trading vs forex: what’s the difference between them - and which one is right for you? Each one has its own unique differences, and each will suit a different type of trader. Here, we take a look at the key differences between the two so you can decide which is best for you.

How much do traders really make? Find out in our blog, What is the Average Trader Salary ?

Day trading vs forex: which is right for you?

Day trading.

Forex.

Leverage.

Less access to leverage.

More access to leverage.

Time.

Trading during the day.

Doesn’t limit you to trading during the day.

Scope.

Thousands of business models, industries and sectors.

A few major currency pairs.

Market.

Benefit largely from bullish markets.

Benefit from bullish or bearish markets.

Forex offers more access to leverage.

Leverage can be a very powerful tool for making money - but it can also be a good way to lose it. Access to leverage in stock trading is much more heavily regulated. In forex, due to the nature of forex trading, it is more widely accepted.

Because of the large sums of currency involved, it would be hard for an average retail trader to trade without leverage. Historically, a standard lot size for trading forex was 100,000 units of currency. While the size of the orders has been reduced, leverage still greatly helps forex traders multiply their gains.

In the US, Regulation T was established by the Federal Reserve in an attempt to regulate the way that brokers lend money to traders. Short traders must have 150% of the value of the stock sold. At the time of the sale, the 150% must be held in a margin account. Leverage in the forex market is much more generous. As opposed to needing to have 150% of the stock’s value as in the stock market, in the forex market you can receive leverage as high as 20:1 for regulated brokers.

Want more trading tips? See our blog on 3 Best Forex Trading YouTube Channels .

Forex doesn’t limit you to trading during the day.

When considering day trading vs forex, it’s important to think about the time you have to trade. Like the stock market, the forex market is open five days a week. But unlike the stock market, the forex market is open 24 hours a day on those five days. This means that you don’t necessarily need to trade during the day. You could even hold a full-time job during the day and then trade forex at night.

If you trade EUR/GBP at night in the UK, you will likely find that the price doesn’t move very much. This makes for poor profit potential. For more volatility, you may want to specialise in a currency pair that is heavily traded in your time frame. For example, if you live in the UK and start trading at 6 PM, the USD/CAD (U.S. dollar/Canadian dollar) would be a good pair for you to trade as the time of both the US and Canada are such that the trading in this pair would be most active. The Sydney session of the forex market opens around 9 PM UK time, so pairs involving the Australian dollar would get a boost.

The premise of day trading stocks is getting in the market and getting out by the end of the day, because keeping your position open overnight increases risk. With forex, you will only have to worry about weekend risk. You could open a forex position during the day or night and rest assured that the market will stay open during the week. If you set a stop loss, it will be triggered. This is in contrast to having a stock’s fundamentals collapse overnight with the price gapping at the open and opening far below your stop loss before it can even be triggered.

Forex has a few major currency pairs, while day trading stocks offer thousands.

This distinction between the forex market and the stock market is not a clear-cut benefit for either type of trading. In the forex market, there are relatively few financial instruments that you have to understand. As it relates to the stock market, there are thousands of options. Each of these stocks has a range of different business models, industries and sectors. On the one hand, forex has few currency pairs, but each pits one national economy against another.

Economies are vastly complex, especially in relation to a company. Then consider that you must understand the balance of one against another, and that doubles the complexity. In terms of understanding the fundamentals of a currency pair, it is much more complex than a stock. However, there are many more stocks to keep track of. Stocks can offer thousands of different opportunities, which is much more than the hundred or so currency pairs available in the forex market.

Which one is better is a matter of personal taste. Forex offers fewer instruments for you to keep track of, allowing you ample time to study and master them. Stocks give you a multitude of different companies, which each offer distinct opportunities, but can be unwieldy to keep track of. In terms of day trading vs forex, this one is a tie.

The most successful trading is the result of an effective trading plan. See our 8-Step Trading Plan Checklist here.

Forex allows you to easily benefit from up or down markets.

This is another key factor when considering day trading vs forex. The stock market is most powerfully driven by good economic times. When the economy is running on all cylinders, more investors enter the stock market. The good times continue on and on, continuing its momentum forward and encouraging even more people to get in on the action. It is this kind of market that’s great for day traders because it’s not uncommon to see stocks rise 20-30% in one day.

Just when everyone is expecting the stock market to keep going forever, that’s exactly when the market begins to wane. For many stock traders, this means a significant drop in opportunities. That’s not so with the forex market.

When the economy is down, it can be possible to gain from shorting the stock market. However, this type of trading is heavily regulated in the stock market - almost frowned upon. In the forex market, such stigma does not exist. Since forex pairs are designed as a mechanism for exchange, buying one or selling the other are simply two sides of the same coin. Since there is no distinction, regulatory or ethical, about buying EUR/USD or selling EUR/USD, that means you can take advantage no matter which way to market is heading.

Forex offers more freedom from regulation.

Day trading vs forex also comes down to regulation - or lack of. As forex is a global market, it can be quite cumbersome to regulate. Banks are a major part of the forex market and they are heavily regulated. The increased interest in forex trading has led many governments to take a closer look at the forex market. As regulators have seen more money entering the forex market, countries have also put the pressure on retail brokers as part of their ever-growing mandate to protect the public from themselves.

Forex, like any other market - stocks included - suffer from scams. But due to the fact that it still retains some mystique amongst the general public, forex is often considered shady or a scam at a higher rate than the stock market. Perhaps due to this stigma, regulation has made its way to the forex market. But the leverage limits imposed by regulatory bodies are still quite lax when compared to those governments have given the stock market.

The regulatory bodies that pertain to different jurisdictions include the Australian Securities and Investments Commission (ASIC) and the FCA (Financial Conduct Authority) of the UK. These agencies make it their goal to protect consumers in their respective countries.