To answer this question, is daily trading profitable? I will first establish some points as a basis. Whether daily trading is profitable depends on 4 areas. Only when we have mastered these 4 areas, then daily trading can be very profitable.
These 4 areas are
- Initial capital
You need a certain level of starting capital to make money from daily trading. Depending on the instrument you are trading, the required margin can be 2% for forex, up to 20% for commodities. Due to the leveraged nature of the deal, you don't have to put the full value of the contract.
- Technique and skill.
Another important factor that will determine if daily trading is profitable, is your level of skills in the techniques that are applied. There are many techniques that traders use to determine entry points, make profit, and stop loss levels.
This includes reversal, median strategy, moving average spring strategy, and many more. Furthermore, the different strategies use a variety of technical indicators that you would have to master.
We earn money from daily trading mainly by exploiting 2 concepts. One is the idea of trading in the trend, while the other is reversing the trend. All strategies and technical indicators are to help you decide to play in one or the other.
Another crucial factor that determines how profitable daily trading can be is the experience of the trader. A trader has to be agile to be profitable. The mantra is to get in fast, get out faster. This requires experience to exploit short-term trends and trend reversals within the longer-term trend. This is especially true in times of high volatility around major events and announcements.
Traders can trade from 1-2 minute charts up to 30 minute charts. Because time is short, price movement tends to be smaller in magnitude, and therefore the size of your position relative to your account capital is crucial in determining your profitability and risk management. All of these are learned from experience
- Control of emotions and mental strength.
One of the most important factors in determining whether you can make good profits from daily trading has more to do with your emotions and mental strength than anything else.
Traders cannot let their emotions overcome them or they will lose a lot of money. To benefit from daily trading, traders must keep their emotions in check. When we make a mistake and our position is eliminated by stop loss, we have to continue and establish new operations.
When we have mastered the techniques and strategies and based on our experience, we must be sure that our winning calls outnumber our missed calls. Another way to make sure that our profits are greater than our losses is the risk-reward ratio that we establish for each operation, which is generally 1: 2. This means that when we win, we win twice our losing operations.
Is daily trading profitable?
Once you are in control of all 4 factors, daily trading can be extremely profitable. For the same amount of seed capital, there can be many business opportunities throughout the day. With such speed, as long as we have a risk reward ratio of 1: 2 and execute more winning trades over losing trades, the potential for profit is huge.
published by :@trabajosdelsiglo