Position trading refers to a trader who carries a trade for a longer timeframe. So, we can call it the opposite style of day trading. The holding time varies from person to person. It may be a couple of weeks, months, a year, or several years. Undoubtedly this is the lengthiest holding time among other trading types.
A position trader feels less worried about the shorter timeframe of market changing. Usually, this kind of trader expects a more significant margin of profit from the trades. From this perspective, investors choose this trading for long-term assets. Now let’s explore some amazing tips which will help us to become good at position trading method.
Since one is determining to hold a lengthy trade, he must have gone through the note of fundamental issues of any particular currency. Single pros and cons of a country’s economic condition, political environment, news release seem super essential in the category. Best indicators for position traders are significant issues for a country. Since the approaches go for a more extended period, unemployment rates, inflation plays a vital role in research.
Technical analysis generally offers two choices. One is to trade the resources with powerful potential trending that is not very popular. The second option is to deal with such a trend that has already gained much popularity. The first option can provide better results, but the risk is heavier, and massive research is needed to apply. On the contrary second one is less risky, but the probability of earning substantialprofit is also less. And remember, when you do the technical analysis, you need to choose a good broker like Saxo. Unless you do that, you won’t be able to trade with confidence.
Some Risks in Position
Position trading has some risky elements similar to other categories of trading. Reverse trending is a strong one among the risks. You may feel surprised by theunexpected trend reverse in your resources, which influences the business’s substantial loss. Minimum liquidity is another element. Because of long-time trades, theliquidity becomes minimal.
Since the time is extremely lengthy, you should set the stop loss and target profit to a considerable margin. It may end up with a great loss or colossal benefit. Those who want to be sure about the account’s money savings need to be concerned about risk management. Though it is safe, compare to others, but you need to prepare for the losses. It is quite certain that the situation will move against you today or tomorrow.
Technical indicators are still used to calculate the possibility of action. While using them, the concern should remain for viewing the price fluctuation of a particular currency pair. Moving averages play a vital role in trend trading. The 50 Day and 200 day MA (moving averages) is the sizeable indicator for the position.When 50 days and 200 days meet together, a sign comes up for a long-term trend. If 50 day crosses the 200 days from below, it will symbolize bearish (Death cross). On the other hand, when 50 days crosses 200 days from the above, it creates a signal of bullish (Golden cross).
Supply and Demand
Supply and demand make the signs of price heading. Position traders decide whether to begin or close an action. For better understanding, a demand or supportintensityis a price point that historically never falls below. These can hold for years. A supply or resistance level tends to historically unbreakable for years even. The historical price is the best reliable source while detecting support and resistance.
You might be successful in your position if you have the quality of independent thinking. One should learn to avoid the unnecessary opinion and apply own creativity to win. An expert in this category must have an understanding of fundamental and technical analysis and how they affect the currency pair. Make sure to fill the account with big capital so thatwhen the market ever walks against you, it becomes easy to stand tall.