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Position trading-Forex Strategy Price Action

Position trading is a longer-term trading approach where you can hold trades for weeks or even months.

The timeframes you’ll trade on are usually the Daily or Weekly.

As a position trader, you mainly rely on fundamental analysis in your trading (like NFP, GDP, Retail sales, and etc.) to give a bias.

Also, you might use technical analysis to better time your entries.

Let’s say:

You analyze the fundamentals of EUR/USD and determine it’s bullish. But, you don’t want to go long at any price. #Forex Strategy Price Action

So, you wait for EUR/USD to come to Support before taking your position.

Now if your analysis is correct, you could enter at the start of a new trend before anyone else.

An example:

Forex Strategy Price Action
Position trading

Now, let’s discuss the pros and cons of position trading…

The pros:

  • Don’t need to spend much time trading because your trades are longer-term
  • Less stress in your trading as you’re not concerned with the short-term price fluctuations
  • A favorable risk to reward on your trades (possibly 1 to 5 or more)

The cons:

  • Require a firm understanding of fundamentals driving the market
  • Need a larger capital base because your stop loss is wide
  • May not make a profit every year because of the low number of trades

And lastly…

There’s a trading strategy called Trend Following (which is similar to position trading).

The only difference is Trend Following is purely a technical approach that doesn’t use any fundamentals.

How to Use Currency Strength for Trading Success

Swing Trading – Forex Strategy Price Action

Swing trading is a medium-term trading strategy where you can hold trades for days or even weeks.

The timeframes you’ll trade on are usually the 1-hour or 4-hour.

As a swing trader, your concern is to capture “a single move” in the market (otherwise called a swing).

So you’ll likely:

  • Buy Support
  • Sell Resistance
  • Breakouts
  • Pullbacks
  • Bounce of the moving average

Thus, it’s important to learn technical concepts like Support & Resistance, candlestick patterns, and moving average.

Here’s an example of swing trading on USD/JPY:

Forex Strategy Price Action

Now, let’s discuss the pros and cons of swing trading…

The Pros:

  • Don’t have to quit your full-time job to be a swing trader
  • It’s possible to be profitable every year because you have more trading opportunities

The Cons:

  • Won’t be able to ride big trends
  • Have overnight risk

Now, if you want to learn more about swing trading, then The Complete Guide to Finding High Probability Trading Strategy will help immensely. #Forex Strategy Price Action

Day trading

Day trading a short-term trading strategy where you’ll hold your trades for minutes or even hours (it’s similar to swing trading but at a “faster” pace).

The timeframes you’ll trade on are usually the 5mins or 15mins.

As a day trader, your concern is to capture the intraday volatility.

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