Day Trading During Lock Down
As the global pandemic of COVID-19, we have seen many countries around the world implementing mandatory lockdown.
All non-essential retail outlets have been closed as well as bars, restaurants, hotels with only food outlets, hospitals as well as pharmacies remaining in operation for the foreseeable future.
Many people who can work remotely, have been asked to do so. Most recently we have seen UK Prime Minister action a full lockdown in the UK and measures are being put in place to pay workers who are not able to work, paying employees up to 80% of their usual salary to cope during this pandemic which shows no signs of slowing.
There is now an opportunity to capitalise on volatile markets whilst keeping in line with the social distancing rules that have been implemented.
What better way to pass the time of self-isolation than trading CFD’s and particular, Forex!
The markets are a volatile place right now, with billions of dollars being wiped off global stock markets and we are witnessing the worst-performing market numbers since the financial crash of 2008.
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There is a way to capitalise on downward market trends and that is by going ‘short’ aka placing ‘sell’ trades on assets. With volatility in the markets comes great opportunity! Arguably there has never been a better time to trade CFD’s such as Forex, Indices, Stocks and Cryptocurrencies.
Should you be new to the world of Forex Trading or you are looking for a new broker, there are a few important factors to consider in terms of broker features.
Look what leverage is on offer from the broker so you can maximise your earning potential when the markets move in your favour. Look for a broker which offers generous leverage with no ongoing account costs. A generous leverage setting for Forex could be considered anywhere from 1:200 - 1:500.
Consider the costs attached to the broker. Whether this is signup costs, ongoing account costs, or commission charged by the broker. A reasonable commission charged would be considered per lot i.e. $5 per traded lot. Think about the cost and if it is worth it for you!
Consider a broker with a 24/7 customer support team. Not only that, a professional support team available to reach out to in a variety of ways such as LiveChat, email and telephone.
The more ways you can contact your broker, the better. 24/7 support is essential in today’s trading world considering that the Crypto Market operates 24 hours a day, 7 days a week.
Brokers which offer micro lot trading, as well as bigger lot sizes, should be well considered, especially if new to trading Forex and other CFD’s. This gives you a chance to ease in gradually and build up towards larger lot sizes.
Look for a broker which offer tight spreads. The tighter the spread, the better as this gives you the best opportunity to benefit from small price movements - ideal in volatile markets.
Look for a broker which is not interested in holding on to your funds. There is no reason a broker should not want to pay you out what is rightfully yours. Having a broker which offers withdrawals in Bitcoin will ensure there is no delay in receiving funds as this process can be done on the same day of withdrawal submission from your portal.
A broker which offers a range of deposit options shows great flexibility of how its customers can get liquidity into their trading accounts - a big plus!
Try and identify a broker which incorporates a range of these features ensuring you get the best value for money ion the best trading conditions possible.
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Now we know some key features to look out for, let’s take a look at how you can benefit from trading CFD’s from home.
As mentioned at the beginning of this piece, all markets are showing an overall downtrend recently across all assets but this does not mean lack of trading opportunity. On the contrary, this is possibly the best time in recent history to short markets.
There have been signs of short term recoveries but with no signs of the ongoing COVID-19 pandemic slowing and interruptions to logistics, manufacturing and travel globally, there are surely more trading opportunities to come.
So what is the best approach to trading Forex from home?
Have a plan
Having a trading strategy before entering a market is paramount. Entering a market with no fixed plan is essentially gambling. Don’t be a gambler, prepare yourself and become a trading success.
A good starting point to any trading plan would be to think of a target profit - a profit that you would be happy to walk away with.
If you have this profit figure in mind and maintain discipline, this will dispel any feelings of greed.
There are so many stories of traders having a position go into profit, hold on, and then the market turns on them. Don’t be greedy!
Many trading platforms such as MT4 have tools built into them to help you when you are not monitoring your trades live. Two of the most useful tools are ‘take profit’ and ‘stop-loss’.
With the take profit feature, it pretty much does what it says on the tin. Traders input the desired profit and when your trade triggers into that zone, you will get stopped out if it reaches TP target and then goes below your desired TP.
In the other direction, traders can set a ‘stop-loss’ which works in the same fashion. Traders input an amount they would be willing to lose should the market go against. This ensures that should the markets move against you overnight, you don’t come back to a completely depleted account balance.
TP and SL are excellent insurance policies to make use of.
There are a range of strategies traders can adopt. In times of volatility such as now, scalping is an attractive strategy to many day traders.
This allows traders to enter and exit markets quickly to make a quick profit. Traders should consider commission charged by their broker as the more trades closed, the more commission will be charged.
Research and analysis
It is important to do your own research! Use reliable sources when sourcing information to paint a picture of market sentiment and how markets are projected to behave. There are brokers which offer news and analysis sections to help you stay well informed and ahead of the curve.
Be wary of leverage
Although leverage can benefit traders and magnify profits it can also magnify losses. Look for a broker which offers a demo account if you are new to trading CFD’s. Using a demo account will help traders in developing a trading strategy before ‘going live’.
When searching for the right broker for you, make sure that the features offered suit you and offer the best value for money. If you can find a broker which offers leveraged trading with no ongoing account costs and the best levels of support - these are nice boxes to tick.
By using the right blend of analysis and research, you can ensure you are fully equipped to enter a volatile marketplace.
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