So, now you have opened an account in forex market and triggered a new position. Is it suitable for you to sit back and let the market run its course? I guess not. As the forex market is not a roll of dice in which traders place their bets and watch the tumble and then simply reap the results. It is a fast moving and vigorous arena where new facts and price movements create new prospects and change previous anticipations of it.
Let us understand the concept of forex open positions
Forex Opened positions can be interpreted as a position in investing in any given trade which is already recognized, or, which is yet to be closed along with an opposing trade. Forex open positions can exist following a long (buy) or a short (sell) position.
It can also be explained as the position which stays open till a conflicting trade takes place. It also means that a trader is holding a certain quantity of a given financial mass.
More about forex open positions
Forex opened positions can be detained from minutes to years, and it mainly depends on the trading style and aim of a trader/investor.
The amount of risk involved through open position also depends on the extent of the position relative to the account size and of course it’s holding period.
It also represents market exposure for investors involving risks that can only be eliminated by closing the position.
Different forex portfolios are composed of forex open positions.
The only possible way to eradicate disclosure is to close open positions.
Let us provide an example that will help traders to understand this concept more properly.
A trader/investor who presently retains 500 shares of a given stock is actually said to have an open position in that stock. Now, when the trader sells those 500 shares, then the position will be closed in reality.
The high volatility of the forex trades makes it tough for the traders to wait too long in forex open positions. And it also limits the power of the traders as well. Though, the decision of taking positions should rely on fundamentals as well as the then situation influenced by all the variables of the market.
Suppose, if a trader takes a position of Euro against a USD at 1.1452, then the level of resistance could be at 1.1400/1.1404. So, if the trader puts a stop loss at 1.1514 and takes the profit at 1.1404, it means that the trader will be having 2 to 3 days of the term position, which is also known as- intraday.
It is thought that the readers will take the recommendations made in this article. Analysing the market, i.e., understanding where to enter and where to exit every single trade and on both cases, to deduce upon a stop-loss and take-profit basis.
Depending on the style of trading the traders are following and also how the overall market is responding, trending or range-bound; traders will have either more or less to do when they will be managing a forex open positions.
The content of this article reflects the author’s opinion and does not necessarily reflect the official position of LiteForex. The material published on this page is provided for informational purposes only and should not be considered as the provision of investment advice for the purposes of Directive 2004/39/EC.