Massive Profit Strategy of Long-Term Traders: Position Trading

In the Forex market, there are diverse trading strategies because investment knowledge is continuously growing in a technology-driven world where we can explore and learn so much more, then adapt it to our own investment style. For long-term traders, there's no strategy more suitable than Position Trading, a strategy specifically designed for traders who hold orders for the long term.  This article will discuss the importance of using the Position Trading strategy, as well as brokers to watch out for specifically for this strategy.

What is Position Trading?

It is a financial asset trading order, such as currencies, stocks, or commodities, held for a long period, typically more than 1 month.  The goal is to profit from long-term price changes, and it often results in substantial gains/losses as a reward for patience.

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There are 2 types of Position Trading

1. Long Position: Opening a buy order to profit during an uptrend.
2. Short Position: Opening a sell order to profit during a downtrend.

Why do long-term traders primarily favor this strategy?

• Provides a broad overview of the market. This allows long-term traders to plan their trades more accurately than short-term trading, as well as to gather information for better analysis and decision-making.

• Suitable for those with limited time. Instead of spending most of their time timing short-term trades, they focus on fundamental analysis to predict long-term price movements.

• Reduces the risk of erroneous decisions. Because this trading style requires significant time for analysis to yield results, each trade is thoroughly vetted over a long period, leading to a higher chance of success.

• Potential for substantial profits. Long-term movements require a significant amount of time, and the longer the duration, the greater the potential returns.

• Alleviates concerns about market volatility.  While the Forex market is highly volatile and short-term trades are heavily influenced by it, long-term trading uses a broader timeframe, thereby mitigating this risk.

Disadvantages of Position Trading

• Requires significant capital.  Holding trading contracts requires substantial collateral, so it is not recommended for those with limited funds.

• Requires high patience.  With long-term trading, if your trade position is in a loss, it may take a long time to recover and turn profitable. This situation can create significant pressure on traders.

• Risk from unexpected events.  News, economic reports, natural disasters, or wars can all significantly impact prices.

• Incurrence of fees. Such as overnight holding fees (Swap) that must be paid if choosing to hold orders long-term.

Position Trading Techniques Even New Traders Can Use

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1. Trend Following

This involves tracking the main price trend to determine its direction, using various tools to aid in analysis, such as Moving Averages to analyze over a specified period, or ADX to assess the strength of the trend.

Image source : https://www.gettogetherfinance.com/blog/breakout-trading-strategies/

2. Breakout Trading

This is a trading technique where investors enter a trade when the asset's price moves past a support or resistance level. Traders must wait for the right timing, liquidity, and trading volume before opening a position.

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3. Value Investing

This is an investment approach that primarily relies on asset valuation to make buying and selling decisions. This technique involves initiating trades when an asset is deemed to be priced below its intrinsic value. Therefore, the core of being a value investor lies in accurately assessing intrinsic value.

Recommended Brokers for Position Trading Strategy

Sources  

https://www.icmarkets.com/global/th/trading-pricing/spreads

https://alpforex.com/what-is-position-trading/#%E0%B8%82%E0%B9%89%E0%B8%AD%E0%B8%94%E0%B8%B5%E0%B9%81%E0%B8%A5%E0%B8%B0%E0%B8%82%E0%B9%89%E0%B8%AD%E0%B8%88%E0%B8%B3%E0%B8%81%E0%B8%B1%E0%B8%94%E0%B8%82%E0%B8%AD%E0%B8%87_Position_Trading

https://www.thaiforexreview.com/blog/Position-%E0%B8%84%E0%B8%B7%E0%B8%AD%E0%B8%AD%E0%B8%B0%E0%B9%84%E0%B8%A3%E0%B9%83%E0%B8%99%E0%B8%95%E0%B8%A5%E0%B8%B2%E0%B8%94-Forex

https://www.xm.com/th/account-types/ultra-low

https://admiralmarkets.sc/th/education/articles/trading-instruments/get-to-know-position-trading

https://fbs.com/th/analytics/tips/position-trading-strategies-435

https://www.wikifx.com/th/newsdetail/202203306674526813.html

https://mtrading.com/th/education/articles/forex-strategy/forex-trading-position-sizing-th

https://www.iux.com/th