“Good Planning is half the battle” – every scope in our life planning works. Actually planning is a key to be a successful Forex trader. If you do not have a plan for executing a trade session then it is possible that you will just end up falling into another loss. In this blog, you can try to find the best strategy for long term trading.
In common – long term forex trading is the safer way to trade with large scale. A large scale trading layout could take into account all of the data useful for a currency pair. Let’s take a look for best trading strategies for long term forex trading.
Basics are okay – make sure
Make sure you have a policy or discipline for the trading. The trading activity should be in time aware of daily activity. You will require a self-written checklist before every attempt in the trading terminal.
If you are not a digital guy – just use a diary or pin a paper in your wall to be noticed easily. If you are smart enough to use digital apps then use google calendar or alarm clock in a smartphone or in your desktop/laptop/MacBook/whatever you use.
You have to be serious enough to make regular success as well as persistent. If you are not mentally/psychologically ready to trade then DO NOT TRADE. Make a habit to set risk levels with goals.
Calculate Profit, Costs - Risk Management
In short term trading, 10-20 pips are traded often. In long term trading, you should consider 200 pips. If not possible then at least 100 and for the bigger risk, you can take up to 300 pips. This will also determine to stop loss value. Many traders don’t consider SL (Stop Loss) in their trading system, though.
SL is useful for long term trading too - especially if you have funds to not lose in case. But if you want a painless trade then you should decide how much you want to invest. Take the full risk for that attempt. You can do it by opening several accounts from your broker.
Spread is another factor for opening big LOT trade. If your broker takes high spread for your desired currency pair then you should reconsider about brokerage. You can take a look at forex broker’s review in various criteria to find whether useful for traders.
Also, take into account that “swap free” account is must include a feature for long term trading. Swaps will cut an amount from your investment on a daily basis. It could be very annoying and can distract you from trade.
Read the chart – Make Your Own Analysis
Never ignore to analyze the market from a technical point of view. It can forecast a possible price for a period of time based on the previous market price chart. Many traders use technical analysis with fundamental views and they get the desired result. If you know that market is fractal by its kind – so if you have a good skill in technical analysis and can find distinct timeframes then you are one step ahead already in your long term forex trading technic. In the other hand, if you are still weak on chart analysis then my suggestion would be weekly candlesticks chart.
Drag your mouse with larger weekly charts and you will see corresponding moves in the daily chart. It will make better feel when you are analyzing in technical POV.
Find the Trend – Research on Economy
Consider a currency pair and find 2 economic picture. If you see a particular economy is losing their more value by paying interest it could be a weaker currency it the pair. Forex traders buy if a currency economy is stronger against another. Hence they create a trend.
Most traders wait for the currency pair price to come back down or move back up, especially those who are trying to guess the highs and lows – looks on old resistance point(s), and then they figure out that it’s too late. Most of the time they lost chances to make profits. And the worst scenario is they often losses their investment.
So spend your time to understand how to accurately spot trends and make profitable trades.
If you want to find possible next trend in long term then you need to find some options related to the economy for the country.
• Political stability
• Next to national election year/month
• Any movement(s) by a significant number of citizens
• Corruption and administration system’s reliability by public
• Bank and financial policies: how often changes
• Employment and finance related changes
• Next X month/days possible incidents
• Find other important factors
When you are playing with trends you will find several breakouts. Identify newly starting trends and breakouts, experiment these ideas in a demo account. Even 2 or three demo account with different conception if you are that much smart.
After several successful confirm breakouts (your identified trends) so that you won’t get down yourself by illusive breakouts. Even if it occurs several times then no problem with that.
Finally, you will find a confirmation which may include a momentum indicator (or more if you find necessary).
You must use technical tools to analyze more deeply charts and understand a single trend is to materialize or not.
RSI and the stochastic movement indicator are most important movement indicators if you couldn’t get something by yourself already. If you are new in forex trading then take these as a key factor for you to experiment FX trading.
A checklist for you to follow:
• Are you feeling bored/unhappy? (NO mental breakdown is allowed to trade)
• Is homework ready?
• Set a goal
• Risk level: how much should you wanna risk
• SL and TP, are they set? (SL is most important)
• Strategy matched with the current position? Fetch rules 2 times.
• Make a note with point after closing a trade.
Being a Successful Trader – follow basic rules
If you can manipulate these key factors you will be able to make strong trading decisions and maximum probability to be effective. Not the first time, try again and again but don’t lose a big amount of bucks. If your technic didn’t work then you have to make a deep investigation and find out what are the key facts you couldn’t get on your own. But here, the key point is are you should not be a novice to trade in the long term? I mean if you have thought everywhere you can trade and make a profit, you start trading anywhere and lost battles one after another. If so then my warning for you – please STOP! It is not for ya.
As already told in Forex trading for beginners you should be aware of keeping notes/diary for every single trade and its environment for your every plan.
You know, creating an affecting trading strategy for a long time is not possible. Because the world is changing every moment. You have to keep yourself updated about what is going on financial markets. So reading Forex news regularly is a good idea for every forex trader.
Before ending, one thing – try to watch other successful traders’ journal if possible. If you don’t have no worries just follow yours one in serious mode.
To make an effective long term trading strategy you have to make a few rules for yourself. It could be a blueprint for what you use each time you interact with your candlesticks or chart.
Long term trading is a good idea if you can take everything into account and wise enough to guess the market situation. In my view, it is the best method for cool guys to play with it. Another benefit of long term traders is – they don’t have to buy signals. If you think you can buy long term signals and can gain money with that – then probably you are making mistakes. Also, free signals are for experiment purpose only; not for serious trades. You know.
Of course, you have to reduce stress and excitement to trade with big scale trade. In this case, it is the hard one to follow, so chose your path with your psychological situation. If you don’t have it, change it.
“Good fortune is what happens when opportunity meets with planning.” Thomas Edison