How to Day Trade Forex in Two Hours or Less (Extensive Guide)
There are multiple ways to day trade Forex in two hours or less.
Day trading is a short-term style of trading that is popular with many Forex traders.
Day trading Forex is simple to understand as the Forex day trader buys and sells Forex currencies on the same trading day and does not hold trades overnight.
Day trading Forex is particularly attractive to the time-strapped trader. Day trading Forex for beginners and experienced traders is popular with both.
Unlike scalping Forex, where a Forex trader needs to be at the charts taking multiple short-term trades, the Forex day trader chooses a currency pair at the start of the day and plans to close the trade before the end of that day's trading session.
You may Day trade Forex in two hours or less, but it does take some work.
If you are working full time, it means you may not be able to check your trades during the day and may not be home by the end of the trading session. But, this is manageable with some careful planning. For instance, some Forex day traders do their analysis in the evening and pick out one or two potential set ups to check the following day.
The Forex day trader must analyse the Forex market and the Forex currency pairs planned for trading, including technical analysis and fundamental analysis.
You'll also note forthcoming economic news by checking an economic calendar.
The Forex day trader may check support and resistance zones, assess the current trend direction and see if a trendline or a trending channel is forming on the Forex currency chart.
With experience, the Forex day trader can day trade Forex in two hours or less, including all of the above checks.
The Forex day trader may work with several Forex strategies to suit his trading style and personality. But the plan is to profit from the price fluctuations on a currency pair and exit the trade at the close of the trading session.
In this article, you will learn how to day trade Forex in two hours or less.
We feature three simple popular Forex day trading strategies that can help you become a successful and profitable Forex day trader.
- How Much Money Can Forex Day Traders Make?
- How Much Money do I Need to Day Trade Forex?
- How Long Does it Take to Learn to Day Trade Forex in Two Hours or Less?
- What is the Best Time to Trade Forex?
- How to Find Forex Currencies to Day Trade
- Which Timeframe is Best for Day Trading Forex?
- How to Day Trade Forex for Profit
- Three Forex Day Trading Strategies
- Recap of How to Day Trade Forex
How Much Money Can Forex Day Traders Make?
One of the first things most novice Forex day traders ask is, 'how much money can I make Forex day trading?'
Professional Forex day traders may have spent years learning how to day trade Forex successfully.
Many Forex day traders make a decent income from day trading Forex, but success depends on several factors:
1. Amount of capital for Forex day trading – it's possible to open an account with a Forex broker with a few hundred dollars. But, it's impossible to generate an income from day trading Forex with anything less than a few thousand dollars. As part of your trading plan, risk management is a big part of managing your account. Typically, a Forex day trader will risk no more than 1% of the capital balance on each trade.
With a risk to reward ratio (RTR) of 2 to 1 as a minimum, that means you risk $1 for every $2 potential reward. On a $5000 Forex trading account, that is a risk of $50 for a return of $100.
Let's look at an example of taking one trade a day with a $5,000 Forex account:
5 trades a week
Risk $50 per trade = $250 total risk
Potential win = $100 per trade
Win 3 trades = $300 return
Lose 2 trades $100 loss
Gain for the week = $200
If you were a consistent Forex day trader, you'd have a monthly return of $800, which is approximately 18% growth on your Forex account.
With a new balance of $5,800, your risk increases to $58 per trade. Your 2 to 1 reward profit rises to $116 per trade.
Compounding your account over time builds your Forex account.
Losses are part of day trading Forex, and you will have losses when you day trade Forex in two hours or less. You won't take huge numbers of trades, so the idea is to be selective and find high probability Forex currency setups to day trade.
2. Your Forex experience – it takes time to become proficient at day trading Forex. As a novice Forex day trader, you'll spend more time learning what not to do and learning what Forex strategies work for you.
3. Your win rate – you may be surprised to learn how low the typical win rate is for Forex day traders. A win rate of 55% is a reasonable expectation. But, with a higher RTR, your win rate could be lower than this. That can be hard to accept when you are new to day trading Forex. It takes a mental shift to appreciate that having losses does not mean you are not good at day trading Forex.
To make a better return, you can increase your win rate, which is not the easiest option.
The easier route is to raise your RTR to 3 to 1 or 4 to 1. A higher RTR makes it easier to grow your Forex account. It may mean that you find fewer day trading setups, but the probabilities of success are higher when you do.
Read More: How Much Money Can I Make as a Day Trader?
How Much Money do I Need to Day Trade Forex?
Based on the above scenario, if you had a capital balance of $50,000, your potential return from day trading Forex in two hours or less at 18%-20% monthly return could be $9,000 to $10,000 per month.
Forex day traders need a bigger stop loss on their trades than Forex traders scalping trades, which means you require more trading capital.
As we mentioned earlier, you can open a Forex broker account with a few hundred dollars, but you'll have a long journey ahead before you start withdrawing profits from day trading Forex.
If you have less than $1000 to day trade Forex in less than two hours, you can read our article that gives you a Blueprint for Forex day trading with $1000 (or less).
How Long Does it Take to Learn to Day Trade Forex in Two Hours or Less?
Forex is probably one of the hardest things you will ever try to master.
There is a 95% failure rate for Forex traders. Forex is a huge financial market, trading over $6.6 trillion 24-hours, five days a week.
Forex is the most accessible financial market for novice traders. For instance, if you were day trading stocks, you would need a minimum of $25,000 as trading capital, and you aren't allowed to dip below that level.
Forex is one of the most liquid financial markets, and many new Forex traders believe that this high liquidity makes day trading Forex easy.
Learning to day trade Forex is a rite of passage.
You are learning the mechanics of day trading Forex, which is relatively easy to understand. But, day trading Forex can be an emotional rollercoaster, causing confusion and frustration for novice Forex traders when you seem to keep making the same mistakes over and over again.
If you want to day trade Forex in two hours or less, commit to the long-term learning process. Spend time practising with a Forex demo account and refrain from day trading Forex with real money until you have doubled your demo Forex account by following your trading plan with low-risk management.
Realistically, allow at least six to twelve months for your apprenticeship into day trading Forex. Ultimately, the longer you take mastering the process, and your emotions, the more chance you have to day trade Forex in two hours or less.
What is the Best Time to Trade Forex?
As a Forex day trader, the essential criteria is to trade at a consistent time every day.
Depending on time availability, you may want to analyse the Forex currency charts on the session opening for your country. But, it isn't necessary. You can day trade Forex with any session.
Here are GMT SessionTimes
Sydney Open 10 PM Close 7 AM
Tokyo Open 1 AM Close 10 AM
London Open 8 AM Close 4 PM
New York Open 1 PM Close 10 PM
If you were in the UK, you might start day trading Forex at the London session opening at 8 AM. It is better to wait for 30-60 minutes for the Forex markets to settle down before assessing the trend direction for the day.
If trading the London session, the Forex day trader would plan to close open trades by the session's close at 4 PM.
How to Find Forex Currencies to Day Trade
The best Forex currencies to day trade are those with high liquidity.
Below are the seven major Forex currency pairs that are the most popular for Forex day trading -
- EUR/USD ( Euro and US dollar
- USD/JPY (The US dollar and Japanese yen)
- GBP/USD (The British pound sterling and US dollar)
- USD/CHF (The US dollar and Swiss franc)
- AUD/USD (The Australian dollar and US dollar)
- USD/CASD (The US dollar and Canadian dollar)
- NZD/USD (The New Zealand dollar and US dollar)
Check Out: Top 10 Forex Pairs To Trade
Which Timeframe is Best for Day Trading Forex?
The Forex day trader does not hold trades overnight. So he is less interested in the higher time frames, such as the daily or monthly timeframes.
But, it depends on the strategies the Forex day trader is using. For instance, a day trader using a trend trading strategy will analyse the daily chart and then look for opportunities to trade on the 1-hour chart or 4-hour chart.
Forex day traders typically don't use the lower timeframes, such as 1-minute, 5-minute, 15-minute or 30-minute timeframes.
The lower timeframes are more valuable to the Forex trader who uses scalping strategies, entering and exiting a trade for 10-pips or less in a matter of minutes.
How to Day Trade Forex for Profit
To day trade Forex for a profit, you will need to have established a consistent practice of returning gains from day trading Forex.
To day trade Forex in two hours or less, you have the below in place -
- Trading Plan – know every aspect of how and when you analyse the charts and start day trading Forex. You have a plan for when you quit for the day, say after three consecutive losses
- Know which currencies to trade – you are familiar with a small handful of Forex currencies. You know the currency pair's historical patterns, resistance and support zones and current trend direction, and you have checked economic news announcements
- Strategies – you have two or three backtested strategies for day trading Forex applicable for different market conditions. For instance, a strategy for trend trading, countertrend trading, range trading, price action or pullbacks
- Risk Management – You know exactly how much you will risk on every trade, and you will assess potential loss before you assess potential profit
- Emotional Management – you are detached from the outcome of your trades. You do not react emotionally to wins or losses, and you have mastered impulse control. At no time do you revenge trade or attempt to win back losses.
Three Forex Day Trading Strategies
Forex day traders wanting intraday profits may use many different strategies.
This section will look at three of the most popular day trading strategies for Forex traders who want to day trade Forex in two hours or less.
- Trend Trading
- Countertrend Trading
- Breakout Trading
For this popular Forex day trading strategy, there must be a clear trend direction.
To establish the trend, take a look at the daily chart and then move to a lower timeframe to look for opportunities to trade in the trend direction.
The image above is GBP/JPY daily chart.
From the bottom dip in March 2020, GBP/JPY has been trending upwards. The daily chart gives an excellent overview of the upward trend for the Forex day trader who wants to day trade Forex in two hours or less.
But, it's harder to find entry points on the daily chart to enter and exit a trade on the same day, so we need to move down to a lower timeframe.
Below is the 4-hourly chart for GBP/JPY
You know the GBP/JPY currency pair is trending upwards. The blue line at the bottom of the image is a support area. On this currency pair, it's an excellent place to enter a trade.
As you can see, on the bottom left, the price touched support twice before getting back into the trend.
If you look at all the dips on the chart, where the price rested for a while, these are typical areas where the Forex day trader might enter a trade. At the close of the trading session, the trade is closed.
Both these images show historical price action. For a closer look at live entry points, the 1-hour chart would be even better. But, for historical purposes, the 4-hour is more visible.
With countertrend trading, you are doing the opposite to trend trading.
You check the charts to identify the current trend and then look for trading opportunities where the price is exhausted and is pulling back to support or resistance or trendline zones.
The below image is BTC/USD daily chart
BTC/USD has been trending upwards for a good while. The above image shows the upward trend, and BTC/USD reached a new high. Here is where you may look for an opportunity for a countertrend trade.
The BTC/USD price hits a high but then can't make a new high (see where the black trendline is), and then a big red candle follows.
You can observe the area of support below that was the last low for BTC/USD, and that is where your countertrend trade target might be.
Countertrend trading is riskier than trend trading, but price action leaves signals, and the above image shows excellent potential for a day trade (on the lower timeframes) or even a swing trade on the daily or 4-hour chart.
With experience, it becomes easier to identify countertrend trading opportunities and, as seen with BTC/USD example, target areas for profit can be lucrative and easily identifiable.
Breakout trading is a popular and common trading strategy for Forex day traders.
Breakouts are not always easy to spot. It's far easier to identify a price breakout in hindsight.
The breakout trader looks for the price to break through a price level.
The easiest way to demonstrate a breakout strategy is to show you on a chart.
The above image is GBP/USD 4-hour chart.
The channel indicates a month-long pullback on an upward trending pair. The price respected the channel twice at the top and twice at the bottom. Then you see the price only reaches the middle of the channel (indicating seller weakness) and then breaks out of the channel.
Let's take a closer look.
The below image shows the GBP/USD 1-hour chart
You can see the top of the channel (black sloping line). On the far left, the price breaks out of the channel and then retests a previous support zone.
That is a potential entry point.
But then the price stays in a choppy range above the channel and tests a support area. Above there is a resistance zone.
The range isn't clear enough to support an entry. So, the Forex day trader would wait and watch for more evident price action and a break of resistance.
To the far right, price fails to reach support. That is a positive sign that sellers are weakening. The price finally breaks resistance and continues on the original upwards trend.
You can find multiple Forex day trading strategies, but our advice is to keep your Forex trading strategies simple.
With the above three Forex day trading strategies, all you need on the chart are a few lines showing how price action reacts and responds to market sentiment.
Recap of How to Day Trade Forex in Two Hours or Less
It takes time to become a good Forex day trader.
You may expect to spend months or years perfecting your Forex day trading plan. To learn how to day trade Forex in two hours or less, you need a few simple strategies and mastery of your trading mindset.
Successful Forex day traders may anticipate returns of 10% or more each month. It depends on ability, experience, risk tolerance and RTR.
For traders who want to day trade Forex in two hours or less, it's necessary to have sufficient capital and expertise day trading Forex.
It is possible to make good returns from day trading Forex, but with a 95% failure rate for Forex traders, it's essential to spend time learning how to day trade Forex.
It takes months or years to overcome impulsive trading and learn to manage your Forex trading following a trading plan.
For live Forex trading, an ideal capital base is several thousand dollars.
You can get started with a few hundred dollars day trading Forex in two hours or less. But the lack of capital significantly reduces income potential from day trading Forex.
Most Forex day traders trade with the seven major Forex currency pairs because of good liquidity and more stable volatility.
Successful Forex day traders trade at a consistent time each day or analyse the charts the night before the morning session opening.
The most popular Forex strategies for day trading Forex in two hours or less are trend trading, countertrend trading and breakout trading. All three Forex strategies are easy to learn.
The Forex day trader checks multiple timeframes to assess trend direction but typically enter trades on the 1-hour or 4-hour chart for intraday trading.
Trading Forex does not come without risk. But with time, dedication and commitment, it is possible to learn how to day trade Forex in two hours or less and make consistent income.
Please note that the above information is not providing advice on tax, investment, or financial services. We provide the above information without consideration for risk tolerance and a specific investor's financial circumstances.
Trading or investing in financial instruments such as Forex may not be suitable for all investors. It does involve risk and the possibility of a loss of capital.
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