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Position Traders – Long Term Strategy

  • Explore the benefits and disadvantages of Position Trading
  • Compare Position trading to swing and intraday trading
  • Reasons you might consider a long-term trading strategy

Forex trading can be fast-paced, exciting market to trade on, but long-term strategies can also be employed when trading. Day-trading or swing trading usually manages risk with short-term positions, assuming that there is less risk if you exit a trade before it moves - position traders assume the opposite - that potential small fluctuations of currencies normalize over an extended period of time if trades are kept. Position traders generally hold trade positions for years, months and weeks - or as a minimum baseline at least longer than a trading week. Also known as buy and hold traders they will generally purchase a currency pair wait for a major observable trend. Discipline is paramount when using this trading strategy - jumping the proverbial gun at the sight of a currency's movement can cause significant losses.

The Basics of Position Trading

Position trading has the benefit of it being less time consuming compared to swing or intraday trading. Swing and intraday trading mandates that traders spend extended periods sat in front of a computer, and use trading software to discern small movements in currencies.- . Position traders do their research, research and decide on their trading strategy. Traders can occasionally monitor their trade, otherwise it is left alone for the duration predetermined by the trader. The most popular way to position trade, is to speculate on the movement of a currency pair within the period the traders intends to hold their position.

Benefits of Position Trading

Position trading is one of the most economic strategies in terms of time, much less time consuming compared to swing and intraday trading. This is due to the fact that the research, decisions and pairs are made before the trade is made and then held for a substantial amount of time. Position traders' trades don't see a heavy effectby smaller movements of currencies like short-term traders' trades are. Finally commissions charged to multiple smaller and rapid trades are non-existent since fewer trades are made.

Disadvantages of Position Trading

Of course, any type of trading carries and inherent risk, the main risk position traders are open to is underestimating a trend that evolves into a true reversal resulting in a significant loss.

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This article comprises the personal view and opinion of the STO Investment Research Desk and at no time should be construed as Investment Advice.

Disclosure: I/we have no positions in any stocks mentioned, and no plans to initiate any positions within the next 72 hours.