There are two groups in which the International foreign exchange market trade can be divided into; the intraday and the long-term trading. The approaches for these types are different from each other. This article covers some features of the long-term trade in the Forex market.
Now let we see two videos. In the first one we will see 1 hour trading lesson how to trade macro and long-term:
As can be deduced from the name itself, this trading category refers to those trades that stretch over long periods of time. With this trading method a ‘stop loss’ as well as ‘take profit’ order deals are implied.
Over a time span of few days, weeks or months, when an order gets activated, a trader can face two scenarios depending on the stop-loss level that is set; a big profit or a minor loss. Apart from that during long-term trading, a deal can be closed in advance. Things are simple as long as it is kept in mind to thoroughly analyze the current market trend prior to making deals as well as setting ‘take profit’ orders.
The trader must be able to make analysis whether the currencies are moving towards the right path and would continue to do so for some time. These monthly or weekly flowchart analysis requiring conclusions to be drawn regarding fluctuations in currency are easy for a trader having some experience.
However, a trader ought to keep in mind is that the long-term trade is a swap that has a deposit limit for the long-term traders. If you happen to open a position in a trend that is against your favour, then you would lose swap on regular basis. This means that despite the fact the trend maybe moving in your favour and the deposit maybe comparable to the swap loss, you may not still get any substantial profits. You may lose your money overnight each time the position is passed.
Despite the small sizes of swap losses, they may still occur frequently. Alternatively, swap can also serve as a source of profits if the market trend is right. Passing positions overnight would not be too risky in itself, but if the market trend happens to be originally wrong then the deposit must be sufficient to resist the unfavorable price movements.
The most appealing advantage of long-term trade is the rarity of losses. And on depositing a handsome amount, the risks of losses are further reduced. By trading with 1-3% of your deposits ensures you are on the safe side. However, there are some rules for managing money that must be abided by else you will eventually lose everything that you earned.
A great deal of patience is required of traders indulging in long-term trade. So a trader should only pick this kind of trade if he can wait for long time period otherwise he/she should look into other options like short-term trading.