Position trading is a long-term style where traders buy and hold securities for long periods of time. It involves holding securities for weeks, and even months.
The decisions to buy and sell are based on extensive research of market trends, and predicting changes in the market in the future. Basically, the trader buys at the start of a trend, and then sells when the trend reaches its height.
There are several advantages in position trading. Even though it’s a long-term strategy, it is still being used by many professional traders to keep their money safe from market volatility. You can learn more about position trading from the various expert reviews like HQBroker Online Trading Review and Online Trading Forex Review.
Most of the time, beginners use short-time frame in the market with a high lot size, and they would lose their entire trading account. There is no doubt that you can earn huge amount of money in forex, but you need to have a solid strategy. Below, we’ll talk about the features of position trading.
This is the biggest advantage you can benefit from position trading. Day traders and scalpers have high risks and market volatility, and they need to monitor the market constantly. In some cases, they could lose their capital. Position traders don’t suffer from this stress. They know their trades have greater chances to survive in the volatility of the market.
In comparison to day trading and scalping, position trading is somewhat a hands-off approach. After the research has completed, and a strategy is placed, the only thing you need to do is periodically monitor your trades. The time allocation necessary is limited, much less than a day trader or a scalper.
Noise is a term that refers to short-term volatilities unrelated to the overriding market direction. Noise can cause damage on short-term trading approaches, frequently ending winning trades too early. But with position trading, it lessens the impact of noise, because trade management parameters in related with larger timeframes are able to resist pressure created by short-term volatilities.
No Early Exits
Position traders keep their trades in the market even when the movement is going to the other direction. Other trading styles have early exit trades on the market with a loss. However, position trading requires strong patience so that a trade can hit potential take profit level.
You can catch strong trends created by evolving market fundamentals when you take a position for a period of time. For example, the USA announced an economic report that may potentially cause the value of USD to rise or fall. A position trader that either buy or sell a currency pair with the USD at the time of the announcement may have the opportunity to gain from an ensuing trend in the market.
The advantages of position trading appeal to traders who don’t have much time to be constantly involved in the market. Though it takes time to make profits with this style, it’s still safer than the other strategies in the market.
Contact your broker to give your more tips and tricks, and to learn more about position trading.