What is Position Trading in Forex?

Trading in Forex

Trading could be superficial or intricate, depending on the perspective you like to take on the field. Forex is one such domain which is layered and is to be explored for its potentials. When you want to take the backseat and relax on the journey of forex trading, there isn’t much chance for you to get to the point of complexity. But as you take the driver’s seat with all the directions posing a challenge to ride through, forex trading will start to appear complicated.

On the surface, like any other concept, forex trading is also simple; delving deeper will equip you with perpetuating data about forex trading. The marketplace that has been made for the trading of currencies is the right platform for traders to make speculations of the profit and conduct well-composed commerce. Forex trading is widely popular as the largest exchange in the world and is, therefore, used by thousands of brokers, individual traders, banks, and other investors.

Forex trading

Forex trading is most often conceptualized as the field for indulging in a currency trade with nothing more than picking the direction of a currency pair to be focused on by the trader. The facts are contradictory to the world’s conception of forex, which calls for experience and patience to invest considerable time in the trade. Technical and fundamental analysis of the trading business has to be done on subtlest of levels. Also, you need to have an in-depth understanding of the market and the factors that affect its conditions. You can only find forex trading systems on the Internet that are virtually supportive, the remaining of which you need to fill with your efforts. Of all the information related to forex trading, it is position trading that we will have a closer look at. Position trading is one kind of trading in forex, which has to be learned by every trader who is planning on going deeper into the business.

Position Trading

Although position trading is referred to as a type of forex trading, it is, in fact, an investing style that has speculative traits to it. This pattern is most followed by the traders when they take an interest in the long-term trends and prices in the market. Position trading has its own set of characteristics with the traders preferring only a handful of major positions. Nevertheless, they can go for any of these positions all through the year for active trading. When you are a position trader, and this style is your forte, you surely will have reasons to stick to it. One such reason for almost all traders would be the opportunities they receive which last for a few months or even for more than a year.

Position Trading

Fundamentals of the trade have to be learnt properly before stepping into position trading since its life of more than just a few months. What every position trader has to be conversant with is the art of smoothly falling into that place when the opportunity within the market strikes and coming out of it as that period ends. It isn’t the elegant virtues you possess that matters the most here; technical knowledge about the timing models that need to be followed plays a key role.

Who is a Position Trader?

A position trader is one who indulges in forex trading with appropriate multi-year or multi-month trend evaluations as compared to the current situation or emergence. They do not act like that of the swing traders who look for active day investments and trends to trade. Position traders like to take the seat for a long time without having to adopt new trading steps every passing day. Previous trends show that most of the inexperienced retail traders go for the short-term day trading option, while the professional Commodity Trading Advisors and Hedge funds incline towards position trading.

Daily and weekly charts will consist of resistance levels and key support which hold significant value in position trading. The professional traders most prominently focus the higher time frame charts for analysis.

Necessary Tools for Position Trading in Forex

Since technical analysis is suitable for timing a long-term trade, it would appear to be the most important in position trading. In contrast, the price action analysis stands as a reliable one for long-term charts. Such analyses are essential in getting to successful trading times, for which, tools are required to notify you with the right opportunities. Here are some of those necessary tools for position trading.

Trend Line Indicator

This is said to be one of the most effective tools in picking the right opportunity since it offers a proper insight into the trading market. With the price action and trends being more apparent on the longer time frame charts, position trading becomes more profitable. The trend line indicator helps by giving a clear directional bias on the market trends and highly prevalent price action.

Support and Resistance

As mentioned earlier, resistance levels and horizontal support play principal roles in position trading. A higher resistance level is likely to come into action when a major resistance or support is broken on the chart by the price action. This rise happens when there is an upside break, whereas when a downside break occurs, the resistance level is likely to decline. When the break doesn’t take place, and the price action falls into the opposite direction, you have to either consider it as a price rejection or be alert for an impending trend in the opposite direction.

Higher resistance

Moving Average Indicators

What matters the most while using the Moving Average Indicator is the longer term’s number of periods that you utilize. The moving averages most often will have a longer-term price action in the 50 and 200-period zones, while you also have to pay equal attention to the 100 and 500 periods moving average.

Most Important Economic Indicators

Position traders will also have to keep a tab on the economic trends, which necessitates a few indicators. While analyzing the macro-economic data for long-term position trading, look out for the indicators such as inflation rates, interest rates, trade balance, and economic and political stability.


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