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The Best Long Term Forex Strategy

How to trade long term forex strategy and How to Plan an Effective Long-Term Forex Trading Strategy in 2020?

In the world of forex, it would be essential to have different types of trading strategies for the short term. Along with it, long term planning is equally essential. With the forex trading strategy for the long run, you aim towards larger prospective profits with even little amount of capital investments. Also, these wouldn’t translate to premature stop losses, unlike trade approaches that are short term.

Making an efficient trading strategy for the long term

Recently we created article Forex Weekly Strategy.Traders need general advice about How to Plan an Effective Long-Term Forex Trading Strategy because trading rules are not only important things. Traders need to see bigger picture.

It’s better to have a clearer picture of what you would like to have from the forex market. The target has to break down the following.

Fundamental analysis and long term system and COT report

The term would refer to proper tracking of the progress of commanding economy heights while are known as fundamentals that would go along with the aforementioned idea. Fundamentals would be things such as interest rates, employment, CPI along with politics.

While trading in the big picture, you would have to know about fundamentals for the involved currencies. It’s much better not to avoid interest rates when trading a bigger picture. Upon holding currency trade for higher than a day, you’ll also notice a thing which is known as rollover. This depends on the involved currencies with the trade direction, you would also pay little interest or also earn interest as well. For the part, if a country pays the ideal amount of interest, the world traders purchase currency against weak currencies while forming trends.

For me, Interest rate, Industrial production, GDP and current high important news are the most important information that I check before any new long term trade. For example, if I want to trade EURUSD I need to know these important facts about the European Union and US economy. Daily chart and Fundamental analysis need to show the exact same direction of the trade before any trade execution.

I like every Tuesday to check the COT report. How to use the COT report in forex trading? In the COT report is most important to figure out Reversals Type One or Reversal Type Two and using knowledge from that to assume the next long term movement in the forex market.
What we can see in COT report :

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Try to see Reversals Type One – When the spread between commercial traders and large investors is big, then we should expect a market reversal.

Reversal Type Two – When large traders start to reverse their positions (i.e. the large investor’s line’s trend starts reversing), we can expect a market reversal most of the times.

Weekly charts and price levels


In step 2, traders need to see the big picture using the weekly chart, to get the idea for Long Term Forex Strategy. On the weekly chart, the trader needs to analyze important levels, last month and last year high and low, close prices, important Fib. levels. Important price levels are trader’s edge, an important trigger for any trade.

So, if you’re not grasping on the happening on currency pairs, it is better to view all weekly chart details with a step back. This would stop you from making uneducated guesswork.

Larger weekly based charts make move on your daily chart appear trivial while providing you with a better feeling about the data you’re analyzing. With a step back you can minimize second-guessing.

With such items, you also make strong decisions for trading for supporting positions that you hold. You must never make trades just for making these. Also, you must easily be able to explain all of these to third parties upon having. If you follow the rule, it would help in avoiding boring trade. With real trading, especially larger picture trading, it gets slow and boring. A lot of traders get brought in and trade in a quick and leveraged way, and due to this there are a lot of failing forex traders.


Forex Trading Technical analysis for long term strategy

The technical analysis takes a lot of forms while you’re putting this into practice. If you’re saying technical analysis for a single trader, they would also think about moving averages, while another market operator would think of MACD while mentioning technical trading.

Except for price levels, technical analysis can show divergence, supply and demand areas, Pivot point areas, oscillators levels such as RSI levels, Stochastic levels, MACd, etc.

There are no perfect rules for trading orders which can tell you when to buy or sell the asset with high probability. Trading is like signature unique, and traders need to develop an original methodology for trading and for market understanding.

While forex trading strategy with a bigger picture, you look out for different technical aspects for supporting trade. So, if you’re concerned about purchasing a currency pair, it shouldn’t be technically overbought.

Am I true or wrong?

And true and wrong. Momentum traders can buy overbought assets very easy but the mean reversion trader will sell. Both can be on the right side.

Some technical analyses must be involved in supporting the decision. This helps with timing while helping to avoid getting within a bad time. Overall you would also get the right idea, but with technical analysis, in the future, you’re also able to reduce associated risks.

Trading with long term forex trading strategy is all about taking all essentials into account while coming towards an informed decision. This is one of the best available methods of forex trading that has been utilized by experts.

What is my Best Long Term Forex Strategy? I like when fundamental news and technical chart show the same. For example, the strong engulfing pattern on the daily chart or weekly chart with strong industrial production for rising currency for me is the best trading opportunity.

Short term forex trading or long term forex trading ?

Is long-term trading more profitable than short-term trading? This is a topic for debate and there is no clear answer. Winning ratio and profitability is bigger at long term trading but compounding effect is bigger at short time trading. But let us see the discussion.

Long position and short position in forex
By definition, a long position in forex is one in which a trader buys a currency at one price and aims to sell it later at a higher price, and short position in forex is one in which a trader sells currency at one price and aims to buy it later at a lower price. Long position – buy currency pair and short – position sells.

Short term forex trading or long term forex trading

Have you been wondering about short term Forex trading or long term Forex trading? In regard to the Forex, it is a good idea to concentrate on growth that is long term. It is important to realize that one will not become wealthy in a short amount of time with the Forex market.

There are those who promote strategies for trading that are long term as being preferred to strategies for trading that are short term. Thus, there will proceed with an explanation regarding the benefits of trading that is long term in comparison to trading that is short term.

The truth is that trading over the long term is more beneficial than trading over the short term. This is particularly true for those who are new to the realm of Forex trading. On the other hand, there are several traders who especially like trading over a short period. Some have even prospered this way quite well. Further, trading for a short term can seem pleasurable. That is why some people who believe in the stronger power of trading for the long term also do add to their portfolio some trading for the short term.

Yet, the results show that trading for the long term can generally yield more money. Also, it allows for more control over risks. In addition, it is easier for new investors to learn trading over the long term instead of the short term.

What is Short Term Trading

Trading for the short term

Trading for the short term refers to items that are held for a time of fewer than seven days. Thus, trading for the short term takes into inclusion those who are scalpers and those who are day traders. They may hold an item for even only a few minutes. There are also other traders in the short term who are categorized as swing traders, because they may hold an item for a few days. Traders in the long term apply the usage of candle charts or daily bar charts; whereas traders in the short term tend to apply the usage of charts that are even as short as only five minutes.

Basically, it is upon the trader to trade as per this personality and his own trading style. The reason is there are many ups and downs in trading and if you do not keep yourself updated about the latest you may be in trouble. There are different benefits for short term trading and long term trading. Those who are willing to get maximum benefit can focus on a specific trade and think of long term Forex trading. In long term forex trading you will be able to plan things in a systematic manner as you will be having sufficient time.

For those who are not aware of what short term trading is well understanding it now. It refers to trading strategies and the time duration in it is for few days or weeks and that depends on the stock market. Thus, one needs to be more careful and study the overall condition of the trading market so that you do not go wrong anywhere. You can earn easily and this is only possible if you are good at trading.

If you are willing to go for short term trading you can also hire the services of a good company that deals in trading. However, they will have their commission on the trading that they will do on your behalf. In the short term, you will have to spend more time in front of your computer as you will have to wait for the stock to go up. You will have to until you are sure you will earn profit from it.

What is long term trading?


Trading in the long term

So, how to trade long term forex?
It is different from short term trading as you will need to wait for at least for weeks to months so that you can gain profit from it. In it, an investor needs not to care about the update of trading on a daily basis as the focus of this investor will be for the long term. Thus, this sort of trading is considered as less time consuming and those who do not have much time to spend can go for it.

No matter whether you are thinking of short term or long term trade there are chances of profit or loss both. Thus, it is better that you do the trading sensibly and with patience.

Traders in the long term are classified by the length of time that the trade endures. Moreover, they are defined by the manner in which the position is handled during the time of the holding session. This does not indicate that such traders are static. They do engage in managing their positions. They may maintain a holding session for a duration of several weeks or even for several months.

It is needful to be cautious concerning information that is misguided. When something seems to be too good to be realistic, the bottom line is that it usually is not true.

Trading in the short term does have some disadvantages. But many people do not pay attention to them. There are two reasons why this is so.

Short Term Vs Long Term Forex Trading

There are lots of people who are interested in doing trading. So, those who are interested in trading need to understand the way it is done. For this, you can easily read articles and books so that you gain knowledge about trading. A lot of technical as well as fundamental analysis is involved in trading. Those interested in trading need to properly understand it so that it does not lead to a big disaster.

Classification Of Traders/Trading

There are many ways in which you can differentiate traders. The most major difference is between the short term traders and the long term traders. Thus, it is very important to understand the difference between Short Term Vs Long Term Forex Trading. If you are into trading for many years you will gain knowledge about the market and will be more confident in doing trading.

1. Programs to become wealthy quickly and business opportunities

There are so many system producers, advisors, and even seminar companies who are overtaking the world of financial retail. What sells better is a system in the short term that produces high returns. That is what people want to hear. The companies realize this to be true, which is why they promote an abundance of trades, tremendously large profits, and loads of excitement. They do this despite the fact that this may simply yield many commissions and spreads with many worries and quick losses. This is a process that functions well for them because they are in contact with those who want money quickly, who thus become loyal fans of their advice and systems.

2. Dealers

This reason is plain to understand. When people make many trades, this increases the money that the dealers receive from the accounts of the traders who trade in the short term. This is true even with small accounts. The dealers do still make money from those small accounts. That is why dealers provide much free education—to snatch more of the money of those who trade in the short term.

It is worthwhile to be aware of the distinctions that exist in regard to trading in the long term and trading in the short term.

The matter of the spread

Traders in the short term are plummeted with facing a challenge right away as a result of the fact that they engage in trading more frequently than traders in the long term. Thus, these traders in the short term must deal with overcoming the issue of the spread more frequently.

In order to receive a profit of 1,000 pip during times of trading euros and US dollars, a trader in the long term is able to conduct one trade which escalates to 1,002 pips (based on the spread for the currency being 2 pips). Therefore, he must be able to acquire 2 pips in order to gain over the spread.

On the other hand, when a person trades in the short term in regard to 50 trades, he will need to accrue 1,110 pips in order to overcome the span of the spread if the spread is 2 pips for euros and US dollars.. This is due to the fact that he must overcome the span of the spread in relation to every trade.

That equates to 100 pips. This means that a trader in the short term must profit ten percent more than someone who trades in the long term.

Then it is logical to consider that it is not worth it to make investing in the Forex market 10 percent more difficult than necessary. The numbers in the scene mentioned above can be changed in order to accommodate any situation. Yet, the fact remains that more transactions add up to more expenses. This is great for the dealer. But this is not contributing to your own prosperity.

Trade in the long term does provide many good investing opportunities.

Wrong focus

Answer: Are you prepare to be nimble?

If you want to trade short time frames – you need to be nimble, fast.

Many traders tend to be overcome by focusing on short term items and miss seeing what is occurring in other areas of the market. There is a lot of moving in the market. Thus, entries and exits are formulated abruptly. The level of energy that is needed to concentrate on only one or two trades in the short term can prevent the person from realizing the presence of more profitable opportunities in the market in the long term.

We can classify the forex traders into 2 groups: long term and short term traders. It is necessary to be aware of short term vs long term while choosing the appropriate trading style.

We will begin by evaluating short term trading positive aspects. The quickly passed action happens to be the initial and the most obvious draw to the short term techniques. Scalping the FX market or day trading can prove to be a notably exciting profession provided you are able to generate revenues. Making fast cash is not a dream anymore; it turns into truth once you master the art of scalping. You don’t have much exposure to the marketplace and this is one benefit of short term trading. On most occasions, positions will be open once you are sitting before the monitor, and they will close once you shut down your computer. A lot of traders value having zero risks while walking away from the PC.

Now we will look at some of the negatives. The most notable is the short term trading highly-stressed environment. On most occasions, novice traders believe that they would be able to jump in headfirst. However, most of them will not be able to understand the way to manage the stress which is related to day trading. It will be possible to conquer the art of scalping by spending a notable amount of time in front of the monitor or observing a scalper in action. Another downside of short term techniques happens to be intra-day instability. Apart from affecting the entry timing, it will stop loss locations too. Even though you might have the correct direction, the incorrect stop in addition to play the spoilsport. Strategies mean everything when it comes to most of the short term techniques!

On the other hand, long term FX trading in place an increased volume of buying and holds type method. Position traders try to take advantage of the general direction of the forex market as opposed to short term trading. Long-term merchants are likewise referred to as position traders who might place just a couple of trades every year. They might see their position only once every week or even less. It is possible to hold a position trader for several months, weeks, or perhaps a year or even longer.

The period of time required for trading is one more benefit of FX market position trading. There is no need for you to position yourself in front of your PC every single day. It will not matter even though you are having full-time work. It will take only several minutes every week so long as the basic stuff does not change.

There are several downsides to long-term trading and the first one of them is the absence of action. It will not be an alternative for you to wait for months for any specific trade to establish and in case you happen to be an active investor. Apart from that, trades once included, will be always in the marketplace. That position can be affected by global events plus other unexpected situations, and consequently, it is compulsory to have correct stops losses. You are further open up to something referred to as swap while doing position trading in the FX market. While purchasing any currency pair, you’re going to sell the 2nd currency in that pair. You have to pay interest which is also called a swap if the currency of the first country does not come with a higher rate of interest.

In general, every type of trading comes with its individual benefits and drawbacks. We have listed only a few in this post. It is imperative to assess your lifestyle plus yourself in the form of an individual while you are choosing your trading type. Try to figure out whether you fancy the excitement involved in active trading or whether you like to be positioned before the monitor on a regular basis. Questions such as these are quite natural in ascertaining a trading type and you will observe the trading type matching your personality and lifestyle the best while evaluating yourself along with your schedule. If you find yourself to be more of a short-term FX merchant who likes to know how to day trade the FX market profitably, then don’t hesitate to learn further through our Forex course and members’ forum.

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