It’s important to have several short term forex trading strategies, and long term approaches are equally important. The long term strategies allow you to have potential bigger profits even with little capital investments. Also, they do not trigger any premature stop losses unlike the short term trades approaches.
How to make an effective long term trading strategy
Come up with a clear picture of what you want to achieve in the forex market. Your target should break down the following:
- Interest rates- the role played by interest rates in long terms plans cannot be if ignored. If you hold your currencies for more than one day, you will either be earning or paying a little interest.
- Weekly charts– if you don’t want to grasp what’s happening on your currency pairs, step back and view all the details on your weekly charts. This will stop you from making uneducated guesswork.
- Fundamentals-this is a term used to refer the tracking of the economy’s tracking heights. Fundaments include the following: education, politics, and CPI. You will need these fundamentals to help you know what’s happening in the currencies world.
- Technicals– There are many practices involved in trading CFDs. To one trader, technical analysis may be the moving averages, while to another one it may be the MACD. When implementing along trend forex trading strategy, you must find the technical aspects which will support your plan. For instance, you will not want to overbuy a particular currency pair. Your technical’s should, therefore, support your strategy fully to avoid failing in the long run.
Below are the top long term strategies that you should consider:
Swing trading is the best long term strategy for beginner investors. This is because the strategy does not require any experience or discipline as the other strategies. In swing trading, the trader looks if the prices will spike down or up, then define the support and resistance areas mentally. You can hold your swing trades positions for up to seven days.
If you decide to use swing trading as your long term strategy, you will have to be conversant with the support and resistance levels. You will also have to learn how to identify different candles as this will make it easy for you to reveal your swing turning points. Lastly, you must know the moving average, relative strength index and the visual analysis indicator.
This is confirming the newly stating trends or breakouts so that you won’t be easily get fooled by the illusory breakouts. The fake breakouts mostly take place when there is market anticipation of a new trend, but it fails to come in the same way it was anticipated to be. In the confirmation strategy, you must place a few momentum indicators and also use them to conduct an analysis. The best momentum indicators for long term strategies are the stochastic movement indicators and RSI.
Trade the trends
You can use this strategy if only you are not new to the market. This is because trading the direction involves making future market predictions, which you can only make once you have been in the market for a long time. The investors who predict the market lows and highs wait for the price of the trading pairs to drop beyond the initial resistance point. This makes them to end up losing the opportunity which could have gained them profits. To make this an effective strategy for you, take time to learn about the accurate predictions and how you can make money on forex trading by making market predictions.
With these in mind, you can make strong and reliable decisions to support the specific positions you are holding. Long terms strategies are not easy to follow, and you should therefore not hesitate to involve a trusted third party whenever you feel bored. You will be able to make successful long term strategies you key in everything around you currently, as well as what might take place in the future.