What is a day trade?

What is a day trade?

Day, or Spot are the terms used when a position is opened and closed by a trader within the same trading day; this is usually by 10pm GMT. It is one of the most popular ways to trade online, as it allows traders to benefit from any direction that the market is following, through buying, or selling it.


Price movements in Forex or CFD (contracts for difference) are very small. So in order to aim for any reasonable profits, day traders have the choice to use leverage, or marginal trading.


They also have the options to a number of trading strategies, like scalping, where the aim is to profit from holding a position for a very short amount of time, and then ceasing it. This is used for small, quick gains in the P&L (Profit and loss balance.)


What can I trade as a day trade?

All markets are tradeable on the Forex Tigon LTD platform as day trades. There are 45+ currency pairs (2 metals, 13 CFD’s, 5 Energies 6 commodities and 21 indices), and even though commodities are typically considered ‘futures’ markets, Forex Tigon LTD enables easier access to such products to be traded under spot conditions. One factor to be aware of is the expiry dates and daily trading breaks for some markets. Please see our trading hours’ section on our page for more information.


With Forex Tigon LTD the trader has the option to roll the day trade over on to the next day (until expiry), but this may incur a daily renewal fee.

Many traders choose to close out of their positions before the day ends, in order to avoid any possible negative price gaps, which is a jump in the price between the price at closing, and the open price(s) of the next day.


Forex Tigon LTD offers negative balance protection, which means that if the trader has carried their deal over into the next day, and the market then gaps, the trader will never lose what they had invested in that trade.


Benefits and risks

Day trading is a popular way to trade the financial markets as with a small investment, traders, through the use of leverage, aim for higher profits than if they were only trading their own funds. Typical leverage amounts are 1:100, 1:200 or 1:400.


Day trading is a popular choice for trader in the financial markets, as is with small investment traders; through the use of leverage, higher returns on interest (ROI) than if they were to only trade using their own funds.


Typical leverage ratios are as follows, including without limitation to:

1:100, 1:200, or 1:400


However, leverage ratios may magnify losses, as well as gains, so it may be wise to not invest more than the trader can afford to lose. To avoid large leverage amounts like 1:1000 would be wise, if the trader is not able to sustain such loss.

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