Forex trading is a popular type of investing that has long been popular among individuals and financial businesses. Since many people have had excellent success with forex trading, it’s easy to see why you might want to get involved.
It will take several years of diligent study to learn how to trade consistently and produce respectable profits. You’ll need to test out different trading approaches until you find the one that suits you the best and generates the best returns.
You’ll need to absorb much knowledge at the outset of your adventure. Making sure you start appropriately and grasp the process can help you avoid a few months of early challenges.
You’ll need to understand how trading works quite early on, but you should also decide what type of trading is optimal for you. There are a few specific types of trading, one of these is position trading.
Position trading can grant you some great success in other markets, so you’ll probably want to know how it all works! Read on to learn more about position trading in Forex and discover if it’s suitable for you.
What is Position Trading?
When position trading, you hold positions open for much more extended periods. This is usually around a few months or even years. Therefore, you don’t have to worry about short-term changes in price because you’re profiting from price changes over months.
If you hold the position for longer periods, you’ll likely have much larger potential profits from single trades. This can result in huge profits if a currency performs exceptionally well over a few months.
Position trading is much more common in stock markets because of the potential for substantial growth spurts when companies perform better than expected. Large jumps in stock prices can result in vast profits for investors.
However, position trading is less common in forex markets because they don’t experience sizeable long-term growth trends. The most popular currency pairs are usually relatively stable in the long term, so there may not be a lot of price movement over a few months.
Is Position Trading Suitable For You?
Position trading is pretty appealing because it doesn’t require a lot of activity. It’s nothing like the stereotypical view of traders spending hours looking at graphs on screens! If you are confident in your position, there’s no need to check and analyze daily.
If you’re a beginner and just getting used to the market, starting with position trading is probably not suitable. Since there’s not enough activity, you won’t sufficiently practice your technical and fundamental analysis.
It would benefit your career to start with day or swing trading to get some experience under your belt.
Although having some good technical analysis skills is always great when position trading, you’re more focused on fundamental analysis. You’ll use information such as employment rates, exports, and imports to predict long-term trades.
Technical analysis is suited to predict shorter-term fluctuations in price- such as a few hours or days. This isn’t important to position trading, so you won’t need to worry about graphs.