Many traders trade the markets several times a week, or even several times every day, but it’s important to note that a Long term Forex trading system can be just as profitable, if not more so. Just one long term position can potentially yield a lot more profit that hundreds of smaller positions.
If you’ve ever tried short term Forex trading or scalping, you will know that it can be very stressful at the best of times. You have to think on your feet and react quickly to the movements of the market. You also have to contend with requotes and being monitored by your Forex broker if you are doing a lot of very short term trading. There’s also the possibility of the platform going down temporarily which can destroy a short-term position, whereas for longer trades it’s not really an issue.
3 Foolproof Long Term Forex Trading Systems
Are there any foolproof methods for Long term currency trading? Well… there are, but they only work for people who are not fools!
Foolproof methods of Long term currency trading exist for those who realize that the Forex market is bigger than they are; for those who are going to engage in strict money management; and for those who understand that they need to actually stick with their chosen strategy and not flit about with impatience when they take a few inevitable losses. A Long term Forex trading system is essential to making money when you choose to go Long term. Going for the “Big Money” with one or just a handful of trades is the way to biting the dust, not the way to that big money that you seek.
Therefore, if you’re nobody’s fool, you will want to use a Long term Forex trading system that keeps you focused on making long-term profits — and that means you will have to go for and expect smaller gains and a gradual building of your Forex fortune. You will sometimes have luck on your side and make a big killing in one day, but losses are inevitable, too, in this highly volatile market. Over the long term, cutting your losses and mounting up your smaller gains is the only way that you can get rich in the Forex.
So, let’s look at the “foolproof” basics of Long term currency trading
Long Term Forex Trading Strategy #1: Trade the trends
There is possibly nothing more important to making money in both short and long-term Forex trading than trading on trends. Forget about the usual error of trying to predict highs and lows. These are not only nearly impossible to predict, but a new high or a new low is where the new trending starts. When you spot — not predict, mind you, but spot — a new high or low, a movement that ends an old resistance point by at least three pips, you probably have a new trend in the Forex market. This is when you get in. Most investors, especially those who are trying to predict the highs and lows, wait for the currency pair price to come back down, or move back up, beyond the old resistance point, and then it’s too late. They failed to understand a trend. They lost out on most of the opportunities to make profits, and they often take heavy losses from this folly, too. Spend your time learning how to accurately spot trends and you’ll make money in the Forex.
Long Term Forex Trading Strategy #2: Swing Trading
Swing trading is likely the best method for the novice Forex trader. This is because it doesn’t require the discipline or the experience with trend-spotting that trend investing does. Swing trading is about looking for a price spike either up or down, then mentally defining a particular area of resistance and support, and then watching like a hawk for the momentum to shift while the level holds before entering your long term Forex trading signals. Swing trades are for quick entry and quick exit. You only hold your position most of the time for two to seven days.
Swing trading works, ironically, because of folly. But not your folly. It works because short-term price spikes get caused by emotional trading driving the pair price too far too quickly; and as a result, the prices very soon return to fair value. You as the swing trader seek to over buy and over-sell the resistance and support levels and then trade into them.
Long Term Forex Trading Strategy #3: Confirmation
This is a part of trading the trends, but it should be viewed as a method in its own right. Confirmation means confirming breakouts (newly starting trends) so that you don’t get fooled by false (illusory) breakouts, which as you can imagine do sometimes occur. (This happens when a new trend fails to materialize as anticipated.) Confirmation involves the placement of a few momentum indicators and using them to more deeply analyze whether a perceived trend is likely to materialize. The two most important movement indicators for you to learn as a novice are the RSI and the stochastic movement indicator.
There you have it. Practice and master these three foolproof methods for Long term currency trading and over time you could become very successful indeed!
Contribution By Market Traders Institute