Professional traders are a fussy bunch. That’s because the boundary between success and failure in markets can be the proverbial ‘cutting edge’—and having the right trading platform can make or break trading plans.
Day traders earn their living by entering and closing out various trades in a day in trailing profits. This strategy demands fast and dependable trade execution, the lowest possible commissions and passage to customer service when things go astray. We will guide you to the best day trading platform UK so that you may achieve your day trading objectives while avoiding pitfalls.
What is day trading?
Day trading is a short-term strategy that traders deploy to buy and sell financial instruments with the objective of closing out positions by the day’s end. The concept of day trading in the UK has risen in popularity lately.
Technology has played a big role in this – owing in the main to swift broadband and mobile connections, UK traders have a plentitude of real-time market data at our beck and call. This has precipitated many more people accessing the markets via day trading. Put another way, placing trades during the course of the day to attempt to profit from volatility as market prices appreciate/depreciate.
But what strategies ought you to use? Ought you to keep it simple or use something a tad bit more sophisticated?
Using technical analysis for day trading
Many day traders use technical analysis by analysing price charts, for instance candlestick charts, and suggest a ‘tidy’ approach to their trading strategy. These traders would like not to load their charts with lots of varied indicators in order to try and over-reach direction. Instead, they will concentrate only on price, generally called price action trading . When trading in this manner, you still have some vital reference points on the basis of what has happened previously to aid you plan future trades.
For hopeful traders, the previous day’s high and low are pivotal levels to mark when mulling a strategy for the day. This makes eminent sense: yesterday’s high demarcated the point where sentiment turned, and the sellers returned to the market, impelling the price lower. The market consensus, ergo, was that the price was way too high. And naturally, the preceding day’s low shows where the buyers recouped confidence as they surmised the market was undervalued – voting with their wallets, they bought. These levels could be significant if they come into play again and furnish a day trading strategy’ cornerstone.
Day trading strategies
Day trading strategies may verily be at variance from longer-term trading strategies in that they concentrate more on profiting from shorter-term movements in the market, compared to moves that occur over several days or weeks. Day traders must be continually concentrated, since markets can move abruptly in the short term. Short-term strategies are rather effective in volatile markets, like oil trading. Some intraday strategies find discussion hereunder:
- Trend following strategy
- Mean reversion strategy
- Scalping strategy
- Momentum trading strategy
No strategy is effective all the time, but even a simple day trading strategy can help a trader identify low-risk, high-reward trades with reasonable precision at critical points during the course of the day. Some traders would also interpret the failure of one trade as a chance to set up another. If the level breaks, it can signal the start of a new trend, giving another opportunity to attempt profit. Successful futures exchange day trading can frequently lead to investors being given a funded day trading account provided their profits match up to an excess of the daily sine qua non.
How to Day Trade
- Open an account. A live account will give you immediate access to a demo account. Here you can practise day trading with virtual funds.
- Choose your product. Great brokers like ROinvesting, ETFinance, and Capixal offer spread betting and CFD trading , both incidentally derivative products. Notably, in the UK spread betting is tax-free .
- Browse recommended brokers’ range of financial markets , and go for what suits your trading plan best. Each offers trading on hundreds of financial instruments within the commodity, share, forex, index and treasury markets.
- Determine if you wish to buy or sell. Decide your entry and exit points on the basis of if you think the price of an asset will appreciate/depreciate.
- pay careful attention to the news. If you are day trading stocks or forex, specifically, these markets can be affected in the short term by major news/economic events.
- Use risk-management controls. Stop-loss orders can aid in close out positions when the market moves against you, diminishing your capital loss risk.
Day Trading Instance: GBP/USD
Morning, 22 April, the UK day trader could study the preceding day’s high and low in the popular GBP/USD forex pair. When the price dipped back to the 1.4300 level, the buyers returned during the previous day. Naturally, there was no way of forecasting what would happen on 22 April, but there was a well-grounded chance that 1.4300 could finally be a significant level for that day’s trading. The expectation would be for buyers to return again ahead of that 1.4300 mark.
Day Trading: support and resistance
This is precisely what happened. There were two occasions over the course of a couple of hours where the GBP/USD rate returned to that level, trading down to 1.4320. The day trader would think about purchasing here since there had been demand the preceding day.
Another major benefit of deploying absolute support and resistance levels like this to plan trades is the often neglected but vitally important risk management. Day trading is, naturally, all about trying to make profits, but it’s just as necessary to limit losses when things do not go as envisaged. So, for instance, if the GBP/USD rate skidded below the 1.4300 level, something will have changed, and the day trade could be excited for a minor, handle able loss.
Day Trading Tips
Follow rules you set for yourself.
Discipline is one of the most vital attributes that all experienced traders have . Keep a wary eye on your incorrigible habits, and seek to resolve them ASAP. You are trading in a disciplined way provided you decide on a carefully thought over set of rules to administer your trading decisions and subsequently follow them. Find ways to desist from breaking your rules and address them if that’s a problem. As a day trader, it’s a useful idea to reassess your rules at the end of each month. The shorter time frame of this style of trading necessitates this.
Managing your money
Money management is crucial when day trading. It is one of the critical elements of trading over any time frame. Definitely, if you intend to trade for many years to come, you are going to have to apply proven money management strategies. There are whole tomes devoted to this topic, containing diverse, disparate approaches, and you must take the time to chance upon a method that you’d be comfortable with. The risk/reward ratio is vitally important. Do not forget, it doesn’t matter if you win 90% of the time if your losses are bigger than your wins. Naturally, your wins must be larger than your losses.
Risk management finds regular use
Remember to use stop loss orders to manage your risk when placing your market entry orders . This insures you. You have to be aware of precisely where your stops should be just before entering the trade. This is a commendable habit to have and will shield you from trades that go against you. Standard stop losses can be slippage-prone when price gaping happens. Nonetheless, guaranteed stop losses will always close out positions at your opted-for level.
Day Trading psychology
- Act with firmness once you have garnered an informed opinion.
- Stay level-headed. You ought always try to remain calm – this is particularly true when faced with a loss. React as per your rules. Mentally go over your worst-case scenarios so that, if they do eventuate, you are prepared and can keep a cool head. Don’t forget that your loss can exceed the amount you have deposited on a trade when trading with leverage. Some brokers offer cash accounts for day trading, which aids in lowering the risk since these accounts disable leverage-use, short selling and pattern day trading. It is advisable to steer clear of these techniques till the time your understanding of day trading has matured.
- Don’t let other traders’ opinions affect your trading strategy. Sometimes other traders will offer their perspectives on the market and advise without taking into consideration your trading methodology. Should you need advice, you ought to consult a qualified professional who will be able to appreciate your style of trading and give their thoughts in accord, without distracting you.
- Be patient. Accent has to be placed on the significance of patience when trading. When you can’t find any viable trading opportunities, don’t trade just for the sake of it. As you get used to a market, you may find that knowing when to open/close a trade becomes easier. Your intuition sharpens with experience.
- Be aware of your stress levels. Day trading can be stressful as it demands continual attentive motivation. You can check this by taking time to mull over your priorities. Get a vantage point on trading and its place in your life. Increased stress levels can adversely affect your trading decisions. Therefore , in case you feel like your stress levels are climbing, it’s probably right to step away. You can return to trading later when you are in the proper frame of mind.
- Have a flexible approach. When you’re trading, it’s also essential to be flexible with your positions. Market conditions can change swiftly. You need to be elastic in your approach. You need to be prepared to adapt to fluctuating market conditions and to alter your trading strategy per the scenario.
- Stick to your opted-for market and a given timeframe. These are two parameters that are under your control in an environment that can transform very quickly.
- be unapprehensive of realising your profits. When you discover that you have exited a trade at a profit but the trend continues, don’t brood doom and gloom .You did profit, so start looking for the next chance. If you inordinately worry that you are exiting too early time and again and are missing out, you could come up with and test a re-entry technique.
- Keep thorough trading records. When you are running a given trade, you could jot down your reasons for entering it. This will aid you later as you can assess your past trades , thereby learning from them. By keeping good records and writing down exactly why you entered the trade, you accelerate your learning curve.
- Have a lucid picture of if you are where you hoped to be. Once you have been day trading for a month, take some time to assess what you have done. Examine your trades and ask yourself what you would do differently if you could make the trade again. This can help you become a more harmonious trader in the long term.
Best day trading platform UK
Each recommended broker’s trading platform comes complete with technical indicators, social trading commentaries and updates from their teams of professional market analysts. This facilitates beginners to their entry into working with reputed day trading platforms. From the very beginning, you will never feel alone, as the recommended broker will have your back. Beginner traders are given particular attention. intermediate and advanced traders will feel they have hit the ground running, especially considering the continual stream of news and info-filled updates at traders’ disposal all trading day. The customer support staff will be at your beck and call.
Your broker will also offer trading through the globally recognised MetaTrader 4 platform for those already accustomed to the software.
Which Trading Platform Does ROinvesting Offer?
Intuitive and user-friendly, the ROinvesting platform deploys MetaTrader4 , in addition to web trading, and mobile trading. The high performance of the MT4 platform has been attested to many times over. Signal and market functions give users access, enabling them to copy trade, analyse the market.
The Webtrader is designed to be compatible with all manner of
browsers. A trading interface, Webtrader needs no installing. Users can
simply log in with the aid of any browser on their device, irrespective of
their location.in common with the MT4 desktop terminal, the Webtrader offers
nearly all features to the extent that you can access trading in 350 plus
assets. Moreover, the platform has customisation friendly analytical
instruments, you can track your trading history. You can find support in 7
languages. Real time rate streaming and one click trading make your trades so
MT4 platform –
The software as it runs on your computer has many more features above those for the Webtrader. This is especially true with regard to automation and customisation.
Compatible with Windows and MacOS devices, you have the option even to install
it on LinuxOS devices. The software was made for continuous learning, since you
can keep adding tolls, data streams, and signals to enrich your trading.
This allows you to access your funds anywhere. Both Android and Apple users
will find this app completely compatible. This is obviously handy if you are
away from home/office.
Bolstering client security with STP
In addition to trading platforms, the broker has taken care to move away from dealing desks. Actually, the broker counts on a liquidity provider for its trade execution, by agency of a Straight Through Processing.
How is Trend Trading Beneficial to you?
If you seek to learn how to invest in stocks or trade Forex, you need to have specific skills to detect trend direction.
Regardless of your preferred time frame, you need a trend to be put in motion if you crave to make a profit.
The time frame is directly proportional to trend strength.
That’s the provenance of the expression “the trend is your friend”, the cornerstone of many trading strategies.
Trading with the trend gives you the benefit of eliminating some of the flaws that intrinsically all trading strategies have.
As long as you trade in the trend direction, even if you’re bungling on your timing, the forces behind the trend will finally work in your favour and do away with some of the risks. Everything will be in sync when you trade with the trend. Furthermore, identifying strong trends can lead to making bigger profits. Admittedly, there are more pips available in the trend direction than in counter trading.
Mastering Trend Trading
To eliminate any element of subjectivity, simply use the most impact moving average or the 200-day EMA on your chart.
How to decide upon the trend direction using the 200-day EMA? Is it an uptrend or a downtrend we face? It all boils down to how price is positioned compared to the 200-day moving average:
- We’re in an uptrend,if the price is above the 200-day MA,
- We’re in a downtrend,if the price is below the 200-day MA.
What is forex day trading?
Forex day trading is a short-term strategy that is especially popular among retail forex traders. This is because it can be a fast way to see ROI. Nonetheless, Forex day trading is best suited to traders who have sufficient time to analyse the markets and monitor their trading charts during the course of the day. Forex day trading is concerned with reacting to short-term changes in the prices of currency pairs. Therefore, this requires focus,control, discipline and the ability to stick to a trading strategy. Our day trading platform UK presents a range of trading tools, like technical indicators and drawing tools, to aid traders in devising possible entry and exit points for their trades.
Forex Day Trading Strategies
It is vitally important for traders to familiarise themselves with varied trading strategies when it comes to the foreign exchange market. Generally forex trading strategies will also involve fundamental analysis,technical analysis, or a combination of the two. Forex day traders will use this analysis to aid traders determine when to buy and sell currency pairs.
Oftentimes, more than one strategy is required for forex day trading. In addition, as market conditions fluctuate on a day-to-day basis, traders ought to be prepared to adapt their strategy, such as conditions with high market liquidity.
Forex news trading
Traders will want to stay up-to-date on the most current trading news releases in the short term. Being aware of what is going on in the markets assists traders prepare for possible trading decisions in advance and to formulate their trading goals and strategies at the day’s start. In addition, central bank announcements, interest-rate changes and other data releases are vital economic indicators that may affect currency prices. As a day trader, it is vital to keep abreast of major economic announcements and news events .
Another popular way traders approach forex day trading is via trend trading. This is concerned with looking at longer-term charts to identify a trend. Upon the overall trend being established, traders examine a chart with a smaller time frame for trends moving unidirectionally. Your broker’s advanced trading platform has several indicators and drawing tools that can be used to help traders decide trends.
Momentum trading is another well-regarded approach to forex day trading. This approach is always on the lookout for strong price movements coupled with a high trading volume in the direction of the move’s direction. Momentum trading is concerned with being able to wait for the best chance to open a position. Traders could think about using Global Trade ATF’s specialised advice on momentum indicators to decide upon forex market momentum .
Breakout trading is a well-known strategy for forex day trading, which is also concerned with waiting for big market moves. These big moves can be precipitated by things like shifts in a country’s economic data. As a result, they can happen abruptly or post expected economic announcements. With breakout trading, a trader would wait for prices to break through considerable price support and resistance levels , showing a trend’s start. The trader would subsequently open a position in the direction that they expect prices to move. Identifying and trading forex breakouts is an efficient strategy for those who keep abreast of happening economic and political news.
Best Indicators – Day Trading Forex
Understanding chart types and how to use technical indicators are basic for any forex day trading strategy. Day trading evenuates over a short time period, so it is essential to make quick decisions. Traders ought to be able to read charts with precise efficiency so that their trading has no lag. The following technical indicators may be used on forex day trading charts:
- Fibonacci Retracements,
- Simple Moving Average (SMA),
- Bollinger Bands,
- Stochastic Oscillator,
- Relative Strength Index (RSI).
Forex Day Trading Rules
Forex day traders should be up to speed with their order types . This is concerned with both entering and exiting the markets. Orders are essential as they can help traders determine when to open a trade, maximise potential profit, and close their trades to cut down losses. If a trader is not fully aware of their order types , this can retard their trading and finally cost them money. A good broker would apprise you of its order & execution types, including market orders and limit orders, and stop-losses.
Traders ought always to research a broker properly before trading with them, since it is vital to be aware of brokers who are not completely authorised and regulated by the national regulatory authority. All forex brokers are subject to certain regulations. Traders must check that their chosen broker is fully registered and authorised by the Financial Conduct Authority (FCA) in the UK.
If you wish to open an account with a broker, you ought to look for reliable and efficient forex day trading software. Every second counts, with this strategy. Hence, it is essential that there’s real-time pricing and that trades placement is easy and efficient..
starting day trading forex
- Open a live account to begin trading now, or practise sans risk with demo account virtual funds
- Opt for your product between CFD Trading and Spread Betting.
- on how to succeed-research the forex market and consult the broker’s day trading guide for tips and strategies .
- Bone up on your knowledge of technical analysis by scrutinising technical indicators and price charts .
- Use risk-management tools such as stop loss orders to shield your capital.
Is forex day trading profitable?
Forex day trading can be profitable provided trades are successful and the trader is patient and concentrates on price charts analysis and economic data. Moreover, there are also various risks concerned with this short-term strategy.
Risks involved in forex day trading in the main include a considerable loss of capital. It is by-and-large acknowledged that trading in narrow timeframes can expose the trader to more risks. Additionally, trading currency pairs on forex margin, like with spread bets or CFD trades, can expose the trader to more risk. Margin trading needs a smaller investment, which gives traders leverage to more considerable trading volumes. The risks are momentous as well, however, as the trader could end up losing in excess of their deposit provided prices move in the opposite direction.
Unanticipated news events can also precipitate volatility in the forex markets. During volatile market conditions, inordinate use of leverage could end up in substantial losses. Therefore, it is good practice to limit the amount of risk you are exposed to on each trade. For instance, you could risk only one per cent of your overall trading account balance on every trade.
be mindful,however, that stop-loss orders do not vouchsafe that your position will be closed out at the price you set. During volatile market conditions, prices may shift from one level to another. Sometimes they skip the levels in between. This is called slippage. In such a case, stop losses could execute at a worse level than what had been set, precipitating larger losses. Some brokers will offer what is known as guaranteed stop loss orders , so that this may not come about. For a minor cost, they are guaranteed to close out your trade at the price set. These are all things to ponder when opening a forex day trading account.
In the high leverage gambit of retail forex day trading , there are specific practices that can precipitate an unmitigated loss of capital . There are five everyday mistakes that day traders can make to amplify returns, but that finally have the opposite effect.
Below we outline these five possibly crippling mistakes, which can be steered clear of with discipline ,knowledge, and an alternative approach.
Averaging Down on Forex Trades
Traders often chance upon the practice of averaging down. It is seldom intended, but many traders have inadvertently ended up doing it. There are a number of problems with averaging down in forex markets.
The main problem could hypothetically be that a losing position is being held—possibly sacrificing money and time. Thus, this time and money could potentially be placed in a better position.
Secondly, a larger return is the requisite on your remaining capital to retrieve any lost capital from the initial losing trade. For example, if a trader loses 50% of their capital, a 100% return will return with them to the original capital level. Losing large amounts of money on single trades or single days of trading can retard capital growth for extended periods of time.
Averaging down will precipitately lead to a large loss or margin call, as a trend can nurture itself longer than a trader can stay liquid —particularly if more capital is being added as the position absorbs losses.
Day traders are vulnerable to these issues. The short timeframe for trades implies that opportunities are short-lived, and quick exits are necessary for escaping bad trades.
Pre-Positioning Forex Trades for News
Traders are generally aware of the news events that will shift the market. Still, however, the direction is amenable to forecasting. Therefore, a trader may even be pretty confident that a news announcement, for example, that the Federal Reserve will/will not elevate interest rates will affect markets. Even then, traders cannot forecast how the market will respond to this expected news. Other factors like additional statements, figures, or forward-looking indicators courtesy news announcements can also make market movements extremely fallacious.
There is also the plain-vanilla fact that as volatility surges and all kinds of orders hit the market, stops are triggered on either side. This often results in whipsaw-like action prior to a trend emerging.
For all these reasons, taking a position prior to a news announcement can really upset a trader’s probabilities of success.
Forex Trades After News Hits
In a similar vein, a news headline can hit the markets at any indefinable time, causing disruptive movements. Conversely it seems easy money to be a reactionary, grabbing some pips. If this is done in an unverifiable way and sans a solid trading plan, it can be just as destructive as trading prior to the news coming out.
Day traders ought to wait for volatility to recede and for a pure trend to develop following news announcements. In this scenario, there are lesser liquidity concerns, risk can be handled more productively, and a more stable price direction is discernible.
Risking in excess of 1% of Capital on Forex Trades
The customs taking on excessive risk does not have to translate as unreasonable returns. Close to all traders who risk massive amounts of capital on single trades will soon or later lose it . A general rule is that a trader ought not to risk (in terms of the difference between entry and stop price) more than 1% of capital on any single trade. Professional traders will often risk far less than 1% of capital.
Day trading also calls for extra attention in this domain, and a daily risk maximum ought also be set up. This daily risk maximum can be 1% (or less) of capital, or the same as the average daily profit over a 30 day period. So, for instance, a trader with a $50,000 account (leverage not reckoned) could lose upto $500 per day per these risk parameters. Conversely, this number is alterable, so it is more in concordance with the average daily gain (i.e., if a trader rakes in $100 on positive days, they keep their losses nearer to $100 or less).
This method aims to ascertain that no single trade or single day of trading has a major impact on the account. Therefore, a trader knows that they will not forfeit more in a single trade or day than they can reclaim on another by using a risk maximum that is equal to a 30 day period average daily gain .
Fantastic Expectations in Forex Trading
Much can be said of fantastic expectations, which find their provenance in many sources, but often lead up to all of the above problems. Traders more often than not impose their trading expectations on the market, yet we cannot bank on it to act per our desires. In not so many words, the market is indifferent to individual desires, and traders must submit that the market can be in a flux, volatile, and trending all in short-, medium- and long-term cycles. There is no true-blue method for segregating each move and profiting, and believing otherwise will result in errors in judgment and frustration .
The best way to side-step unrealistic expectations is to design a trading plan . If it yields steady outcomes, then don’t switch it – with forex leverage, even a small gain can become meaningful. As capital matures over time, a position size can be expanded to bring in higher returns or new strategies can be put in place and tested.
Intraday, a trader must also allow what the market offers at its several intervals. For instance, markets are generally more volatile at the trading day’s start, which implies specific strategies placed during the market open may not work subsequently later in the day. It may become more sedate as the day matures, and a different strategy will have to be used. Toward the close, there may be an escalation, and yet another approach will find use. If you can believe what is given at each point in the day, you are better positioned for success even if it does not sync with your expectations.
Best Day Trading Platform UK: Conclusion
While it’s formidably onerous, day trading can yield massive rewards for the minority who manage to succeed over time. However, more and more efficient markets and the prominence of algorithmic and high-frequency trading have made day trading a hard target for mere individuals.
Per studies, algorithmic trading has recently accounted for as much as 60% to 73% of all equities trading in the United States. The comparable figure for the K is in the neighborhood. More often than not, individual ‘point and click’ traders are now putting themselves in competition against impregnable machines.
Counterbalancing this is the fact that such powerful platforms, tools and data are in unprecedented abundance to serve independent day traders. So get in sync with the Future Wave of Day Trading – open a trading account at ROinvesting today!
High-Risk Investment Warning: CFDs are complex instruments and come with a high risk of losing money rapidly due to leverage. 70% of retail investor accounts lose money when trading CFDs with this provider. You should consider whether you understand how CFDs work and whether you can afford to take the high risk of losing your money. Please read the complete Risk Disclosure Statement, which gives you a more detailed explanation of the risks involved.