Forex Trading Styles

Forex Trading Styles

Forex trading is more commonly associated with fast actions and with very short term time windows in mind. The position trader is the type of trader that would open a position on any currency pair following a trading strategy just the same as usually with all traders but the exit strategy used would be for a long term hold rather than a short term movement or fluctuation.

A position trader would keep the position open for weeks or sometimes even months in order to reach wider profit targets. I saw position traders open trades based on monthly charts or weekly chart patterns, this of course would take the same to develop and turn to profit. They are looking for the overlying major trend of the currency pair and not the temporary moves which can be very different from the long term ones.

Example: If you look at a monthly chart which is trending upwards this would contain a number of dips or retracements. These of course are all day traders heaven and activity with the pair ranging hundreds of pips every day to stay within the longer term range. So against a day trader trading a short, the retracement of the major uptrend, the position trader would have been looking for a larger picture and would have only been interested into the long term position, ignoring the retracements.

As usual, all Forex trading styles can be profitable if traded well in conjunction to a Forex trading plan and a proper entry and exit strategy so there is no holy grail out there, just a matter of how comfortable you feel with possibly being in red even for a long time!

The broker choice is also important for this type of Forex trading, since you shall have the position open for a long time and possibly can even be on the negative side you have to be aware of the rollover cost of the trade and the cost of keeping on the long term this trade open. This will of course be required to be added to the profit target as pips will be taken up by the rollover cost of the trade.

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