If you’re one of those traders who don’t enjoy the thrill of fast-paced trading, or don’t have the time to sit in front of the screen throughout the day to monitor the markets, then you ought to try position trading.
HQBroker Online Trading Review says that position trading is for traders who have a lot of patient, and a good understanding of the fundamentals. It focuses to profit from the long-term prediction of trends in their trades. In addition, it’s also the longest term trades that could last for several months to several years.
This trading style is attractive to people who either have limited windows of time to trade, or people who want to diversify their trading with both long and short term trading strategies, as gathered from Online Trading Forex Review.
Furthermore, position traders aren’t concerned with minor price fluctuations or pullbacks. Instead, they want to capture the bulk of the trend. Thus, the holding of trades that last for months to years.
This also allows traders to sleep peacefully at night because they don’t have to monitor their trade. They can risk 200 pips to potentially make 1000 to 3000 pips.
Mainly, the approach in position trading is it doesn’t require much time. Once the initial research is completed, and the trader has decided how they want to trade, they enter a trader and there’s nothing much left to do. The position is monitored on occasion with a little maintenance or oversight.
As position trading is held for so long, fundamental analysis will be the predominant application when analyzing the markets. Traders will look at longer-term analyses such as the 200-day moving average to identify the primary trend.
Fundamental analysis direct the long term trends of currency pairs, and it is important you understand how economic data affects your countries and its outlook. And because of the lengthy holding time of positions, your stop losses will be very large.
Additionally, position trading requires a really thick skin since it’s almost guaranteed that your trades will go against you sooner or later. When you experience huge swings, you must be ready and trust your analysis for you to remain calm during these difficult times.
The biggest risk of position trading is minor fluctuations. Though they are commonly ignored, they can turn into a full trend reversal that could result in a significant loss or drawdown if the trader fails to monitor the position or set stop losses.
Different trading styles are utilized in the forex market. While there’s no such thing as the best style, certain styles just suit different people’s personalities and time. If you think position trading is for you, you can always contact your broker to find out more about this style, and useful tips on how to use it.