What are the main factors that should be taken into account when performing Forex Day Trading? It is well known fact that foreign exchange news is the most frequently used method of earning money with Forex Day trading. This is where traders open short-term trades in accordance to the Forex trading news. This is a quite risky system and traders can easily find themselves into a losing position. Here we will try to bring light to three of the most important things that should be kept in mind while trying to make profit by Forex Day trading based upon the currency trading news.

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Not considering the market expectations is something that can bring a lot of trouble to forex day traders when using the news based day trading. For example if an announcement about the dollar is expected to be made by a government financial institution, and the trader predicts this announcement to be positive, then the trader opens a trade just before this event to take place, expecting a rise of the dollar’s value on the market. What is not taken into account in this case is the fact that the whole forex market was also aware of the report and predicting that it will probably help strengthening the dollar. This means that in fact, the price movement was already on the way days and even weeks before the event and at the moment when the actual announcement has been made a considerable price jump can only happen if the news in the report are much more positive and encouraging than previously expected.

All this means that the trade will only pay off in case of the above-mentioned conditions are fulfilled. If the report is still good, but not so overwhelmingly positive as anticipated, then what may happen is all this to cause a plunge of the dollar and in reality the trader to lose out in the process. This will be as a result of the unrealistically higher expectations of the market long before the report has been populated.

In situations like the above-mentioned, where an very important financial announcement is to be made, there is a huge possibility the actual spread to rise. What really happens is that in cases like that one the trading volume goes down, which reflects in lower profits for the brokers. This is why when such an event is about to take place it should be taken very seriously into account, otherwise traders that normally would have brought profits will end up losing out. Many forex brokers are even refusing to carry out trades when such events are taking place. During such a period it will be a difficult task to find a broker to execute any trades at all, and most likely those who will agree to do so, will not be willing to keep the spreads at their standard levels.

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A comprehensive Forex day trading training is highly advised so that you can develop your own best strategy for day trading. Automated forex day trading systems are excellent way of executing the trades.

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Another factor affecting the Forex Day trading is the so-called slippage. This is the difference between the price a trader had chosen and clicked on, and the actual price your order is filled at. The slippage is depending on the broker as well as on the fact that the prices are varying quite quickly and frequently.

As an example – when the trader is not quite sure  how the announcement would perform during a day trading, he/she may place an order for a long trade if the price rises to a certain level, let’s say 1.3010, together with directions for a short trade in case if the price drops.

Despite all that, the trader could be still in trouble if the price jumps over the “trigger”. Let’s imagine it goes up to 1.3040. When this happens, the trader will notice that the price of the order is higher than expected – 1.3025. If the price falls, it may well settle down at 1.3020. Meaning that if the order was placed at the initial 1.3010 – it will be OK, but at 1.3030, it will not be good at all. So all this come to tell us that slippage is an important factor in the day trading, may cause some damage, and must not be underestimated.