Position trading is one of the four major forex trading styles and the most long rage approach of those four. In this article we’ll look at what position trading is, what’s involved in being a successful position trader and what types of trader are best and worst suited to using this route to trade forex.
What is position trading?
Position trading is all about long-term price movements in your chosen currency pairs. As a position trader you’re looking to achieve the greatest potential profits from significant shifts in the currency price. When we talk about position trading being a long-term strategy, you’re going to be holding your position for at least weeks, more likely months or even in some cases years.
As a position trader, you’ll still use charts but you’re looking at weekly and monthly fluctuations rather than the intra-day approaches of scalping and day trading or the day to day shifts than concern swing traders. You’ll need to be comfortable blending analysis of fundamentals with the more commonly used technical indicators favoured in other trading styles.
In position trading you’ll be concerning yourself with major trends happening over time and not worrying about minor price changes in the short term. You’ll not have to spend hours a day staring at a screen or doing analysis, so it allows for a more hands-off approach. The down sides are that you may not make a reliable profit year to year because your trades are so long ranging.
Who suits being a position trader?
Position trading is ideally suited to people who enjoy fundamental analysis things like GDP, NFP, sales indexes etc.) and who are looking for a form of trading the allows them to dip in and out when they have time in the week rather than devoting a large amount of time to analysis on a consistent basis.Tags: trading