The forex market is open 24 hours a day as the authorities running and controlling the market are located in 4 different major time zones without any proper central location. Thus, one can place a trade anytime a day and keep hold of a transaction for long period.
Many pro forex traders surely find profits in long-term trading, but is it a good choice for everyone? Well, yes, but only if you have placed the trade after the right planning and proper strategy execution at the right time. Still riddled, here is what you should know about long-term forex trading.
What is long-term forex trading?
Long-term trading, also called positional trading involves placing a trade at a specific position and holding it for an extended term, which may be days, weeks, months, even years too. But, it is not for all types of forex traders, mainly for the beginners or intermediate level traders who want to level up their strategy with instant returns.
Although it is most likely for long-term trading to be successful than multiple short-term ones, holding in a position without proper fundamentals of trading ruins the complete excitement and reduces the patience of the newbies. Thus, most of the beginners end up selling the currency pair with loss.
Apart from patience, long-term trading should start from a concrete base i.e. proper strategy on the right currency pair after taking multiple sources into count. So, there is no doubt in concluding that long-term forex trading is better only with strong trends, identifying which takes good knowledge and experience as well.
Is the long-term view important in Forex trading?
No wonder that scalping strategy or short-term trading strategy in which the trader does multiple trades in a day is the most popular strategy these days. Even the beginners in forex trading have a good scope in gaining high returns using this strategy. This strategy gets well complemented with stop-loss tools, triggering tools, and various algorithms of the forex trading platform, click link to know about from tradefx.
It also gives good empowerment for the beginner’s strategy skills and also boosts confidence to continue with Forex trading.
But, the only flaw in the short-term strategy is that the trader needs to analyze the trend multiple times a day and be under stress throughout the day to ensure good returns in every trade placed. Long-term strategy overcomes this flaw to a great extent, but there is a catch.
Long-term Forex trading strategy works well only with the right technical analysis and fundamental analysis. This means one needs to correctly access data and the ongoing economic conditions i.e. price trend before placing a trend to hold for a longer period.
This means, a forex trader needs to look at the forex charts keenly, but this time keeping the long-term frequencies in mind. So, one should ensure whether it is going to be upward or downward trends for upcoming days or months rather than the short peaks or troughs.
Benefits of Long-term forex trading
Long term trading strategy has many unique benefits for playing a long game with the right technical and fundamental analysis, some of which include
- Less stressful
As the long-term strategy works with a single analysis, small crests and troughs on the price trend don’t have high consequences. So, it is practically less stressful.
- Possibly low-risk strategy
By holding the long-term position in the forex market, one can easily predict and monitor the changes especially in the volatile market. So, there are fewer risks involved.
- Less time consumption
When compared with short-time strategies like scalping, long-term trading saves a lot of time as there is no need of analyzing and shifting to other techniques frequently.
- Low investment requirements
Where a trader aims for a short increase in pips, long-term forex traders aim at more than 100 times of it after days, months, or years. So, the initial investments automatically payoffs, without even reaching the set time.
- Stop losses work better
Stop-loss triggers work well for short trades but are activated only when resulting in losses, even in short trend changes. But, the long-term strategy is unaffected with those frequent small spikes and thus one can stay unbothered until the least point occurs. Similarly, once the upper frequency is passed, the trade is always on the higher returns.
A long-term forex trading strategy is undoubtedly more profitable than a short-term strategy. But one needs to have a proper vision that crafts up after thorough analysis and monitoring of different charts. Until reaching that level, beginners can surely use short-term strategies to excel in their trading careers.