Day trading
What you learn in 3 minutesA day trade is a position you open and close inside one trading session, so it never gets rolled over to the next day. That means no swap or overnight financing is charged, but every decision is made while the price is moving. On USD/ZAR around 18.4100, a move of 100 pips on 0.10 lots is about R100, and the same move against you costs about R100.
One day on USD/ZAR: 100 pips, R100
| Step | Amount | Note |
|---|---|---|
| Instrument | USD/ZAR at 18.4100 | example rate used throughout this lesson |
| Position size | 0.10 lots | one tenth of a standard lot |
| Entry | 18.4100 | buy at the quoted price |
| Exit | 18.4200 | closed before the session ends |
| Move | 100 pips | 18.4200 minus 18.4100, expressed in pips |
| Value per pip | about R1 | for 0.10 lots on USD/ZAR at this rate |
| Gross result | about R100 | 100 pips multiplied by about R1 per pip |
| Swap | R0 | position closed before the overnight rollover, so no swap is charged |
Your broker may round the pip value, quote a slightly different bid and ask, and charge a spread or commission on top. Those charges vary between brokers, so the final rand figure can differ from the R100 shown here.
The mistake people make here
The common mistake is to hold a losing day trade past the session close, hoping it comes back, which turns it into an overnight position and adds swap. Another is to size the trade so that a normal 100 pip move on USD/ZAR is more than the account can absorb. Decide the exit before you enter, and close before the daily cut-off even if the result is a loss. If the trade is still open at the cut-off, treat it as a new decision, not a continuation.Check yourself
You open 0.10 lots on USD/ZAR at 18.4100 and close at 18.4000. What is the gross result in rand, and what is the swap?
The move is 100 pips against you. At about R1 per pip for 0.10 lots, the gross result is about -R100. Because you closed inside the session, the swap is R0.
If the value per pip is about R1 for 0.10 lots, what is the gross result for a 50 pip move in your favour?
50 pips multiplied by about R1 per pip gives about R50, before any spread or commission.