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Essential Things to Know about Position Trading

Published On May 29, 2018 | By Clare Louise | Finance

Position trading is definitely not a short term trading strategy. It’s quite the polar opposite of the likes of day trading, scalping, and swing trading.

Position trading, in fact, can be considered HQBroker Forex Bonus Bonus as the longest lasting trading strategy for forex investors. This is because being a position trader requires you to hold a  FX Bonus position not only for a day or for a week. Rather, you have to hold them from a month to a year or more.

It goes without saying that you have to be extremely patient over your trades. And, contrary to many short term trading strategies that make use of technical indicators, position trading requires you to have a very good knowledge and understanding of fundamentals.

Why fundamentals?

You’re holding your trades for so long, which effectively puts fundamental themes and factors in the spotlight when you start analysing the market.

Bear in mind that fundamentals control or influence the long term trends of all currency pairs. This means that you have to keep close tabs of different economic data, which affect countries and their future outlook.

Why do you have to be extremely patient?

Thanks to the lengthy holding time, you will have to use very large stop loss orders. Because if you don’t, your trades will close unexpectedly or untimely due to volatility. This also calls for extra careful analysis during the planning stage.

Another safety measure is to be well funded or well capitalized. Traders who forget to tick this off their lists usually end up receiving margin calls.

As important as those things above, you have to be very risk tolerant. This is because, owing again to the lengthy holding period, you will definitely experience times of uncertainty or instances when your trades go against you.

Not all traders can endure the pressure. That’s why not all patient traders choose position trading. You have to be clearheaded all the time while having absolute trust on your guts and analysis.

What does it take to be a position trader?

Position trading is a very different style of trading, and it requires a different set of qualities.

First, you have to be a very independent thinker. You should be able to easily ignore popular opinions. It’s more important to make your own educated guesses regarding the market’s direction.

Of course, that means you need to be well-versed in fundamentals and fundamental analysis. Even though you wouldn’t trade on a daily basis, you should still be updated and on the watch for market and economic updates.

Understanding what fundamentals wouldn’t also be enough. You have to use this understanding to know the next movements of your currency pair, or where exactly they are going. You also shouldn’t be vulnerable to retracements.

Overall, being a position trader requires you to be willing to wait for the jackpot or the grand reward that will come after a long wait. When you wait long term in forex trading, you can net several hundred to several thousands of pips. If that excites you but you mind waiting for years, just try out other shorter term trading strategies.

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