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.
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.
Now, let’s discuss the pros and cons of position trading…
- 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)
- 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
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.
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
- 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:
Now, let’s discuss the pros and cons of swing trading…
- 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
- 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 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.