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So, is long term forex trading better? How long can you hold a Forex position? How long can a trade last in Forex? What is the best strategy for long term trading? Some traders believe long term Forex trading is better than day trading. Some argue that long term investing benefits include larger profits.
However, profits vary from one individual trading experience to another, so this can't be accepted as a general rule. We can't confirm which is better, in general, because it's a matter of personal preference. Yet, this article will give you an overview of what a long term Forex trading strategy entails, how to do it, and some specific points to pay attention to while you are learning how to trade Forex long term. Before we explore how to trade Forex long term, we must first understand what long term Forex trading is.
Long term forex trading can be summed up in three words — forex position trading. The idea behind this long term investing approach is to make fewer transactions that produce larger individual gains. While traders harnessing this strategy usually aim to make at least pips per trade, their opportunities are far more limited. As a result, traders who want to use a long term Forex trading approach require thorough preparation and substantial knowledge before using it.
Past performance is not necessarily an indication of future performance. What is the best strategy for Forex trading? While we can't say which is best, we can explain how long term trading Forex positional trading works.
Positional trading exemplifies the long term Forex trading strategy. It involves identifying a trend, then following it for weeks or months. In some cases, traders have followed a trend for over a year. When applying a long term Forex trading strategy, traders buy based on expectations, and determine when to sell based on facts.
For example, speculators like George Soros heavily shorted the British pound in They were sceptical of the UK's ability to maintain fixed exchange rates at the time. You should conduct a thorough analysis of the economies of the two currencies, and be sure to evaluate the potential for unforeseen events. The previous section provided some general information on a long term Forex trading strategy. Now let's look at a forex investment strategy in greater detail: Let's say you are a Forex trader based in the US, and some political events have taken place that will likely impact the USD.
Using the information you have at your disposal, you should analyse where the USD will go. If you think there is a good chance the currency will move in line with your forecast, you can begin your long term Forex trading strategy by opening a USD pair position that reflects your prediction. But before doing so, you should consider where the second currency is likely to go. If you want to be conservative, pick a quote where you think the second currency will have the highest amount of stability.
For example, if the developments affecting your currency pair are tied to the Middle East, your analysis might reveal that Japan lacks tight trade agreements with countries in the region, and the Japanese yen JPY has historically enjoyed stability. Once you figure this out, you should double-check your expectations, then list all known expected events and their outcomes.
Covering all these variables is how you develop a forex long term trading strategy, and any other long-term currency trading strategy. To discover more about long term Forex trading strategy in video format, have a look at this highly informative video below:. If you are interested in long-term Forex trading, opening a live trading account with Admirals is one way to do so.
To open a live account today, click on the banner below to get started:. While everyone has a different approach to trading, some general guidelines apply to Forex positional trading. These guidelines are based primarily on risk management , and the FX market's inherent nature. Let's explore how they might enhance your long term Forex strategy, and in turn, your long term trades:.
For starters, don't let your emotions affect your trading, because they can seriously undermine your performance. Turning losing trades into winning ones can be a challenge, but it can also be difficult to close a position out early, and lose out on potential gains. No matter what happens, stick to your strategy.
Every time you open a position, predict where the currency will go and how large the price movement will be. You must also ensure that every trade has both a profit target, and a stop-loss. Always have them figured out before you start using a long-term Forex strategy. When performing Forex positional trading, you should stick to volumes that make up a small percentage of your margin. One of your major considerations for long-term currency trading is ensuring you can easily sustain any common intraday or even intra-week volatility.
Since a currency pair can easily move a few hundred pips in a day, you should make sure these price fluctuations won't trigger a stop-loss. While a long term Forex investing strategy can generate promising revenues, what really matters is profit. Pay close attention to swaps — the fee charged for holding a position overnight. Swaps can sometimes be positive. But in many cases, they will be negative regardless of direction, so evaluating their expenses is crucial to making long-term Forex strategies profitable.
In some cases, you can use a strategy where the pip gain is small, but the swap is favourable for you. Keep in mind that even with the best forex trading strategy , you may not reach your profit target. This could easily happen if you use too little leverage. If you only trade with a small amount of capital, you should expect proportionate returns.
Because of this, always consider the amount of time spent on trading, compared to the monetary rewards received. In most cases, you should use relatively large amounts of capital to make the effort vs. A great way to get a better sense of what return you will receive for your time without risking your capital is to open a demo account.
Traders that choose Admiral Markets will be pleased to know that they can trade completely risk-free with a FREE demo trading account. Instead of heading straight to the live markets and putting your capital at risk, you can avoid the risk altogether and simply practice until you are ready to transition to live trading.
Take control of your trading experience, click the banner below to open your FREE demo account today! But I waited to see price action above March month high:. Recently we created the article Forex Weekly Strategy. Traders need to see the bigger picture. The target has to break down the following. Fundamental analysis and long term system and COT report. The term would refer to proper tracking of commanding economy heights while known as fundamentals that would go along with the aforementioned idea.
Fundamentals would be things such as interest rates, employment, CPI, along politics. This depends on the involved currencies with the trade direction; you would also pay little interest or earn interest. If a country pays the ideal amount of interest, the world traders purchase currency against weak currencies while forming trends.
Interest rate, Industrial production, GDP, and current high important news are the most important information that I check before any new long term trade. Daily chart and Fundamental analysis need to show the same direction of the trade before any trade execution.
I like every Tuesday to check the COT report. How to use the COT report in forex trading? What we can see in the COT report :. Try to see Reversals Type One — When the spread between commercial traders and large investors is big, then we should expect a market reversal. Reversal Type Two — When large traders start to reverse their positions i. In step 2, traders need to see the big picture using the weekly chart to get Long Term Forex Strategy.
On the weekly chart, the trader needs to analyze important levels, last month and last year high and low, close prices, important Fib. This would stop you from making uneducated guesswork. With a step back, you can minimize second-guessing. With such items, you also make strong decisions for trading for supporting positions that you hold.
You must never make trades just for making these. Also, you must easily be able to explain all of these to third parties upon having. If you follow the rule, it will help in avoiding boring trade. With real trading, especially larger picture trading, it gets slow and boring. Many traders get brought in and trade quickly, and due to this, there are many failing forex traders.
Except for price levels, technical analysis can show divergence, supply and demand areas, Pivot point areas, oscillators levels such as RSI levels, Stochastic levels, MACd, etc. There are no perfect rules for trading orders which can tell you when to buy or sell the asset with high probability. Trading is like signature unique, and traders need to develop an original trading and market understanding methodology.
While forex trading strategy with a bigger picture, you look out for different technical aspects for supporting trade. And true and wrong. Momentum traders can buy overbought assets very easily, but the mean reversion trader will sell. Both can be on the right side. Some technical analyses must be involved in supporting the decision. This helps with timing while helping to avoid getting within a bad time. Trading with long term forex trading strategy is all about taking all essentials into account while making an informed decision.
The long term Forex strategy involves. discover-newyork.com › trading-resources › strategies › long-term-strategies. Many forex traders find success using long-term trading strategies. Taking a long-term approach, also referred to as 'big picture' forex.