The idea behind this approach is to make fewer transactions that produce larger individual gains. While traders harnessing this strategy usually aim to make at least pips per trade, their opportunities are far more limited.

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As a result, traders who use this approach require thorough preparation and substantial knowledge before using it. Past performance is not necessarily an indication of future performance. Positional trading exemplifies how to trade Forex long-term. It involves identifying a trend, then following it for weeks or months.

Long-Term Secrets to Short-Term Trading, 2nd Edition

In some cases, traders have followed a trend for over a year. When applying long-term Forex trading, traders buy based on expectations, and sell based on facts. For example, speculators like George Soros heavily shorted the British pound in They were skeptical of the UK's ability to maintain fixed exchange rates at the time.

You should conduct thorough analysis on the economies of the two currencies, and be sure to evaluate the potential for unforeseen events. The previous section provided some general information on trading Forex long-term. Now let's look at a long-term strategy in greater detail: Let's say you are a Forex trader based in the US, and some political events have taken place that will likely impact the USD.

Using the information you have at your disposal, you should analyse where the USD will go. If you think there is a good chance the currency will move in line with your forecast, you can begin your long-term Forex trading strategy by opening a USD pair position that reflects your prediction. But before doing so, you should consider where the second currency is likely to go. If you want to be conservative, pick a quote where you think the second currency will have the highest amount of stability. For example, if the developments affecting your currency pair are tied to the Middle East, your analysis might reveal that Japan lacks tight trade agreements with countries in the region, and the Japanese yen JPY has historically enjoyed stability.

Once you figure this out, you should double-check your expectations, then list all known expected events and their outcomes. Covering all these variables is how you develop this, and any other long-term currency trading strategy. There are several tips that can use to enhance your FX trading. For starters, don't let your emotions affect your trading, because they can seriously undermine your performance. Turning losing trades into winning ones can be a challenge, but it can also be difficult to close a position out early, and lose out on potential gains.

Algorithmic Trading

No matter what happens, stick to your strategy. Every time you open a position, predict where the currency will go and how large the price movement will be. Based on the analysis of previous candles, it shows the volatility of the market. This is the average parameter of the movement of the instrument per unit time.

Trend Trading

There is an interesting comparison in trader circles: ATR is the gas consumption of your car, which depends on the timeframe time on the road , type of engine trading asset and driving style speed of price change. You can read more about it here. It has several versions. This is another version. The modification of the indicator whose template can be downloaded here is rather an arrow indicator. This strategy basically involves earning on a position reversal at the time of rebound off of the stop.

Since the example is reviewed based on historical data, we take one candle that has blue and red arrows as a basis. The levels for pending orders are indicated by yellow circles in the screenshot. You can also see that one of the orders Buy Limit was touched by the price. If a Stop Loss is triggered the price has gone in the opposite direction , we immediately reverse the position with a new fixed stop order at points.

As testing the indicator on history shows, the stop order is triggered only in case of a strong movement. In other words, if the first position turned out to be an error, when the price passes 30 points length of the stop order you will be able to say with confidence that this is not a correction, but rather a strong movement. Therefore, we simply open a position in this direction.

Create Your Own Trading Strategies

You can test the strategy on other pairs, choosing the stop order level depending on volatility. The daily timeframe is itself part of the strategy, as it eliminates local corrections and inertial price movement. In this strategy, you follow a proven path - use classic candlestick patterns, evaluating overbought and oversold zones using the Stochastic. When you have found the optimal settings and obtained the skills of recognizing the pattern, you will get a good result. This strategy involves trading on a rollback after a strong movement deep correction or during a change in the main direction.

After the growing candle closes, open a position.

It is also important that at this moment the Stochastic reverses and starts to leave its zone. We set a relatively small stop order — less than points. For example, points below the local low. We observe the candle on which the position was opened, we wait for it to close in growth. You can add a trailing stop.

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The screenshot shows that on the first growing candle, the Stochastic is below the 20th level and its lines are turned up. On the candle indicated by the arrow pink rectangle , the Stochastic leaves the oversold zone, we open the position. After the falling candle closes, open a position.

Please note that in this case, the Stochastic has already moved out of the overbought zone on the signal candle. This is a leading signal, but it can be taken into account. You can test this for different pairs on historical data. The strategy will be interesting for novice traders. Although signals appear frequently, there is time to double-check them. The conditions for opening trapositionsnsactions are basically unambiguous.

There is controversy regarding the angle of exit of the Stochastic from overbought and oversold zones, which determines the signal strength. But after the signal candle closes in the opposite direction, the probability of error decreases sharply. To develop professional trading skills, you can add Fibonacci levels, indicators of resistance and support levels, and wave analysis. Long-term strategies can be applied to both the foreign exchange and the stock or commodity markets.

On larger timeframes, basic patterns are clearly visible, therefore, building strategies on them is considered a simpler task compared to intraday tactics. However, this is not for everybody. There is no rush, less emotion and excitement. In order to use the long-term strategies successfully, a trader requires patience and endurance, while many prefer speed trading and instant results.

But who said you cannot combine scalping with long-term trading? You can, and switching to daily charts will be a kind of relaxation. So go ahead, download the templates, test and share your opinion on the effectiveness of the proposed strategies in the comments.

Good luck! Did you like my article? Ask me questions and comment below. LiteForex raffles a dream house, a brand new SUV car, and 18 super gadgets.