Penny Stocks

Long-term Trading

Now that you’ve understood the basics let’s learn about long-term trading.
Well, you can select the trading term that you prefer, yet it is better to know
both long-term and short-term trading methods. Hence, let’s start with longterm trading. You must understand that trading style will vary as per the level
of risk a trader can take up. A higher percentage of traders prefer short-term
trading. But the worst part is when naïve traders enter the market. They are
not even aware of the types of trading. But you must not belong to that
category. Instead, before entering the market, you must ensure to learn the
types of trading available in the market. Even though I don’t like to
emphasize that only a fewer number of traders succeed in trading, it is the
ultimate truth. But, you must believe that you will fall into that lesser number
of successful traders. In Forex trading, the determination is important!
If you are a short-term analyst, your pip targets will be lesser, but if you are a
long-term analyst, your pip targets will be higher. However, your pip targets
have a direct impact on the profit and stop-loss placements. When you are
dealing with long-term trading, the stop losses should be more
comprehensive and allow price actions to do its part. The technical analysis is
related to long-term trading. But, on the other hand, long-term trading and
fundamental analysis are different. The traders who trade long-term must
consider macroeconomics factors including geopolitical factors, global
commodity price, and even interest rates. Thus, you must understand that
fundamental analysis used in short-term trading will not be used in long-term
trading. So, using the fundamental analysis, the long-term traders will be able
to find the entry points to enter into trades.
Usually, traders assume that the costs in the Forex market are spreads. Well,
if it were short-term trading, then, the assumption would have been right.
But, in long-term trading, there are many other costs than spreads. In fact,
spreads might not seem like a cost for long-term traders because it is one time
cost when they enter into long-term trades. But, there are costs like swap and
rollover. Yet, you can’t treat this like a huge cost because they are minimal.
Plus, at times, there are positive impacts of swap and rollover costs.
Whatever the trading time frame you choose, you must make sure to manage
your positions once you enter into trades. But, if you are a long-term trader,
you have ample time to manage your positions. Of course, you can make
adjustments even after surprise news and data releases, but you should never
be neglectful when you are trading Forex.
Finally, the best thing about long-term traders is that you’ll not be as
emotional as a short-term trader. Your emotions will be less intense because
you only trade a few long-term positions. Basically, when you trade less,
emotions are less. Also, you will not be spending much time in analyzing
your trades so that you are not subjected to emotional issues as much as
short-term traders. Still, there’ll be an emotional crisis, but as traders, you
must practice handling your emotions successfully! Also, deciding whether to
trade long-term or short-term is in your hand, and it has a lot to do with your
personality!