Long-term trade refers to the trading method aiming the profit using the price movement of the one cycle of the market wave between about a few weeks to a month, and in some cases, between a few months.
The trading period changes depending on the market and to the length of the chart you are looking. You will hold a long-term position, you might feel a little anxiety, and the frequency of trading is low. Since you cannot deny a great feeling of boredom, some traders often perform the day trade and scalping while doing the long-term and swing trading.
About the advantages of Long-term position in Foreign exchange.
You will get the interest when the position is carried over every morning.
For currency of high interest rate, the swap interest rate is high.
Double earnings because when the interest rate goes up, the currency value will also increase for a short period.
There is no need to stick to the market in 46 hours.
・Conversely, the disadvantages are,
・There are cases when loss occurred more than the swap interest rate.
・Since the currency value also depreciates for a short period, there is loss when the interest rate goes down
You cannot receive the merit of high leverage.
In other words, the benefits and disadvantages are back to back.
The most important when you want to challenge Long-term trade is the choice of currency.
・Choose the currency with high interest rate.
・Study the reason of high interest rate. It’s good if the interest rate is rising by the inflation tightening from the economic boom. Avoid when the country’s condition is worsening and the ・interest rate is rising in order to issue debenture.
・Since there’s no need to do frequent loss cut, reduce the leverage.
Be careful with the interest rates trend.
Please keep in mind the four points above.
What I particularly hope for you to be careful about is the leverage. In the day trade, when loss occurs, although you can avoid the risk by diligently doing the loss cut, in case of Long-term trade, it is whether how much you can withstand to the appraisal loss. The Long-term trade, at the point of view of the risk management, you can withstand to the steep market fluctuation if you set the leverage about 2 to 3 folds. And also, take note of the interest rate difference trend. Generally, if you have to buy the Australian dollar, although most of the traders only pay attention to the Australian dollar interest rate, (Swap interest = interest of purchased currency – interest of sold currency), Even if the purchased currency interest rate decreases, even if the interest of the sold currency increases, since the reduction in interest rate difference invites the selling of traders of existing aiming swaps, please always watch out the trend of two countries with regards to one currency pair.
The contents introduced so far will be the point of discretionary trade, so when using Forex automatic trading software (EA), it is assumed that these points are incorporated in logic.
Why not try to choose a long-term trade Forex automated trading software (EA) in reference to this area? This is essentially will be helpful, it is best to decide by the published performances.
In addition, when the market is not moving, sometimes there is no entry for more than a few months. Although there’s nothing we can do about it, but since it’s not interesting, it is recommended that you organize the portfolio and logic with more trading in relatively scalping system.