Long-term trade occurs when a trader holds a position for more than a day which can go up to a week or a month. Unlike short-term trading, long-term requires fundamental and technical analysis while devising the strategies.
Making a perfect long-term trading strategy might involve a lot of work which may also be time-consuming. But here we discuss some best long-term Forex strategies that can help you through your trading.
- Position Trading:
Position traders look at charts on the weekly or monthly basis to analyze the market. But that doesn’t require much time as a position trader knows how the market is going to move and where they want to enter. A typical position trade can last up to months or even years.
Position traders usually make one to three trades a year which is enough to return them with a significant profit. As it goes on for a long period, position traders usually ignore the short-term price movements or pullbacks. Considered to be the best long-term Forex strategy by many, position trading is one of the favorites of long-term traders.
- Swing Trading:
Unlike position trading, in swing trading, traders hold a position for a few days or weeks. Swing traders don’t usually rely on any fundamental analysis. They depend heavily on the market trend and technical analysis for determining their entry and exit strategies.
Swing traders exit a market when:
the stop-loss is reached,
moves in the opposite direction of the trade,
it reaches a profit target,
a set period has passed.
Swing trading is that it does not require the constant monitoring of markets. Traders with a full day job or those who currently study can take the maximum benefit of this strategy.
Swing trading can generate monthly income as it takes place for a short period.
This strategy can also avoid large losses unlike in position trading.
Swing trading is also considered to be one of the best long-term Forex strategies.
4. Following the Trends:
Following the trends is another best long-term Forex trading strategy since the 1980s. It is probably the most commonly used strategy in long-term trading. Long-term traders usually focus on the price trend and disregard all the other options. Following trends can prove beneficial to traders if done with the right discipline and rules.
Having a fundamental analysis of the market can help a trader significantly in creating profits. But even without a fundamental analysis, long-term traders can use technical indicators to find the exit and entry points on a chart.
Although a part of following the trends, confirmation is considered a standalone strategy. It is primarily using a secondary indicator to confirm the trend or breakout showed by the first.
Traders use momentum indicators to analyze whether the trend is likely going to happen thoroughly. Two most popular momentum indicators that traders use are Stochastic Oscillator and Relative Strength Index (RSI).
It might happen sometime that indicators show two different signals called as divergence. A divergence may indicate a sudden direction change of the price which many traders find advantageous.
These were some of the best long-term Forex strategies and methods for long-term trading.
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