In this step-by-step guide, we’re going to cover how to become an intraday forex trader. Before we dive into it, let’s define what an “intraday trader” or “day trader” is!
An intraday trader by definition is a trader who enters and exits trades within the same day, hence the “intra” which comes from the Latin “intrāre”, and means within or inside of.
This means that most if not every day you decide to trade you’re entering and exiting your positions in the market before the market closes or the session you’re trading ends. Does this mean that you have to take a trade every day? Absolutely not, and we’re not advocating that you should do that either.
Becoming a successful day trader requires a lot of discipline and patience because it’s your job to pick high-probability trades to enter, not to just enter as many positions as you can. This is the most common misconception about day trading, that more trades equal more profit, but that’s just not typically the case.
One last myth that we want to dispel is that you can’t become a day trader while working a full-time job. If you work at an office and you’re able to execute on a 15-minute chart, you can trade and work at the same time. Yes, it may be difficult especially if your job requires your constant attention, but it is possible. With that said, there are of course many jobs in which you’re not sitting at a computer in an office, or you can’t bring a phone with you on the job, but for those who can bring a phone, laptop, or tablet with them to work can utilize alerts and chart analysis and preparation before work to trade during the day.
Now of course, if you drive for a living or operate heavy equipment or machinery we advise against trying to trade at the same time, that’s just a recipe for potentially hurting yourself or others!
1. Decide What Session(s) You Want To Trade
Step one is deciding what session(s) you want to trade in the market. Depending on where you are located in the world and what session makes the most sense for you to trade, you’ll have to pick one or two and stick with your decision. If you don’t know what the different stock market hours and forex market session hours are, be sure to check out our guide!
If you’re located in North America, Central America, or South America, you may want to consider trading in the morning or during the day depending on your local timezone. We recommend trading the U.S. indices (S&P 500, NASDAQ 100, or Dow Jones 30) during the U.S. Stock Market session, or the major forex pairs (EURUSD, GBPUSD, etc.) in the New York Session! Alternatively, if you want to trade in the evening local time because you work during the day, you could trade the Australian Dollar or Japanese Yen pairs in the Asia session.
If you’re located in Europe, the United Kingdom or Africa, you have the option of trading UK, European, and even the German stock indices during the day at your local time, or you can trade the major currency pairs in the London Session in the morning local time and or the New York Session in the early afternoon to evening local time. Trading while in Europe or Africa presents the most flexibility for those who want to capitalize on the two highest volume sessions in the forex markets.
Lastly, if you’re located in Asia or Australia, you have the option of either trading the Australian Dollar or Japanese Yen forex pairs which tend to have more volatility in this session compared to the standard major forex pairs. Alternatively, if you want to trade at night local time in Australia or Asia, you have the opportunity to trade the New York session if you’re willing to stay up a bit late, but you’ll get exposure to the New York session’s volatility in the major pairs.
2. Learn An Intraday Trading Strategy
Step two is to pick a trading strategy and stick with it. At Phantom Trading, we teach a supply and demand trading strategy that is actually quite flexible. Our strategy is used by thousands of traders around the world for swing trading and day trading pretty much any financial instrument you can think of ranging from the major pairs to the indices, and even stocks and cryptocurrencies.
Learning a strategy can be hard work, but we’ve developed a framework that is proven to take even some of the most inexperienced traders and turn them into disciplined and consistently profitable traders.
A Word of Warning: Not Everyone Can Become A Trader
Remember, trading is not for everyone. It’s our duty as professional traders to warn those who think that becoming a profitable trader will be a walk in the park when the reality is that finding consistency can take literal years and that for some people, it can quickly devolve into a destructive gambling addiction (which is also why I highly recommend you stay away from casinos). Unlike casinos which are meant to be for fun, trading is a serious business and should be treated as such.
While our strategy is great for helping people build consistency, like any trading strategy, not everyone will find consistency in the market. We’re firm believers that any trading strategy can work, but that at the end of the day, it’s about the work you’re willing to put in, what you make of it, and whether or not you’re psychologically cut out for trading.
Learn The Principles of Forex Risk Management First
If you’re serious about becoming a professional trader, we urge you to learn about risk management first and foremost so you understand concepts like risk-of-ruin and account durability.
3. Choose Your Entry Timeframe
Step three is to choose an entry timeframe, contrary to what some amateur traders think, you don’t need to enter on the 1-minute timeframe or lower to be an intraday trader. In fact, we have some traders on the team who solely enter on the 15-minute and 5-minute timeframes after doing their higher timeframe analysis on the daily, and 4-hour timeframes.
We actually recommend learning how to enter off of the 15-minute timeframe to start because it means you won’t have to be so precise with your entries. The 15-minute and 5-minute timeframes in particular are much more forgiving than the 1-minute timeframe which is why we suggest starting there.
We often see traders jump right down to the 1-minute or even second timeframe and take a lot of losses despite being correct about the market’s intraday direction which can destroy their confidence as a trader. Remember, you don’t need to try to make hundreds of +R. Start with a small profit target and focus on consistently hitting it every week and every month!
4. Backtest The Strategy To Build Your Edge
Step four is to take what you’ve learned in step two (which may take several months mind you), and start testing it in a simulation environment in order to start building your trade setup recognition skills and to start practicing executing markets in an environment that doesn’t involve hindsight trading.
We recommend either backtesting using Tradingview’s built-in bar replay function if you don’t want to spend any extra money since you’ll probably be using them for charting anyways, or if you’re looking for a paid option you can go with Soft4FX, FXReplay, or Forex Tester 5.
When starting out it may make sense to enable bar-replay or to do hindsight testing in order to understand your edge and avoid getting frustrated, but eventually, you’ll want to also test without bar replay to simulate trading your chosen strategy, trading session(s), and entry timeframe in a simulated live market environment.
5. Prove Consistency On A Demo or Small Live Account First
Step five which is arguably one of the most important is to open a demo trading account and/or a small live account with just enough money that losing a single trade “hurts” to start exposing yourself to a true live market environment.
Unlike backtesting, the market moves a lot slower in real time which introduces a different set of psychological challenges. You’ll likely overthink trades, be fearful, be overconfident, get fear of missing out (FOMO), or any combination of the aforementioned pitfalls most amateur traders face.
This is why if you have the means to open a small live account with some capital in it you can afford to lose, you can start exposing yourself to the fear of losing and start building up your trading psychology skills. This leads us to our next step.
6. Build Up Your Trading Psychology & Consistency
Step six is to start building up your trading psychology and consistency by continuing to trade your small live or demo account (which could also be a prop firm trial account too by the way). What’s important at this step is to ensure you’re journaling your emotions and journaling your trades using a trade journal so you can address any problems with your trading as you’re building up your consistency. It’s important to measure and reflect on your trades in the market in order to improve.
In terms of building up your trading psychology we highly recommend checking out Best Loser Wins by Tom Hougaard as it’s one of the best modern trading psychology books we’ve stumbled upon to date, and it’s what we’d also consider a modern version of Trading in the Zone by Mark Douglas.
To put it simply, in order to build your trading psychology up, you’ll need to experience the different psychological challenges that traders face in the live markets firsthand in order to build the skill of trading psychology. By journaling your emotions and trades you take in the market, you’ll also get a chance to reflect upon what you did well and what mistakes you’ve made when trading your edge in the market so you can hone your edge.
7. Take Your Edge And Get Prop Firm Funding With It
Once you’ve proven consistency in your trading to yourself over the course of 3 to 6 months, step seven is to start looking at taking prop firm funding challenges through prop firms such as FTMO, E8 Funding, or MyForexFunds to scale your funding up and to start earning more with the trading skills you’ve built up!
8. Build Up A Live Personal Account
Now that you’re funded, it’s time to start building up your capital using your profit splits from your prop firm accounts to build up your own personal account and to back yourself as a day trader. In the end, it may take less than a yea, or up to 5+ years for you to achieve this but, it’ll all be worth it because you’ll have developed the skill to consistently make a profit in the markets.
The goal here is maintaining and growing your wealth through a mix of prop firm funding and by continuing to build up your personal trading accounts!
Are You Looking For A Strategy To Help You Get Consistently Profitable & Finally Get Prop Firm Funding?
Join Phantom Trading to harness the power of our supply and demand trading methodology and get exclusive access to our global trading community filled with like-minded traders, plus learn from our team of funded traders with a combined 50+ years of trading experience featuring our founders Wyse & Warner who have institutional experience, and experience with trading using prop-firm and private funding.
You’ll also get industry-leading support from our team of experienced traders who have over $1.5+ million in funding through prop firms combined. With multiple weekly Zoom live streams covering the London and New York session, we’ll help you build your technical analysis and trade psychology skills so you can find your trading edge once and for all.
Robert Castillo – Currency & Commodities Trader,
Financial Analyst, Writer & Editor.
Robert is a funded trader based out of Toronto, Canada, and has been trading currencies, commodities, stocks, and cryptocurrencies for over 7 years. Outside of trading he enjoys producing music, mixed martial arts, and riding his motorcycle in the summer.
Disclaimer: This is not financial advice. Trade at your own risk. The information provided here on our newsletter and on our website (https://phantomtradingfx.com) are purely for educational purposes. Past performance does not guarantee future results. All trading performance displayed is purely hypothetical. There are risks associated with investing in securities. Investing in currencies, stocks, bonds, exchange traded funds, mutual funds, and money market funds involve risk of loss. Loss of principal is possible. Some high risk investments may use leverage, which will accentuate gains & losses. Nothing on our website, email newsletter or YouTube Channel constitutes professional and or financial advice. You alone assume the sole responsibility of evaluating the merits and risks associated with the use of any information provided by Phantom Trading.