Position trading is extremely popular in the investment world. Most experienced traders love to use the position trading method as it allows them to make a consistent profit without taking much risk. If you intend to become a successful trader in the Forex market, you must learn to trade the market in a higher time frame. And when you will analyze the data in the higher time frame, you will evaluate the core factor using a position trading method.
Though the position trading method is a very tough thing to learn still we are going to give you five easy steps to master this technique. Read this article as it is going to change your life.
Select the major currency pairs
To become good at the position trading method, you should be trading the market in the major pairs only. If you take the trades in the cross pairs, it will be really hard to make a regular profit. Most importantly, you will be losing money and thus you will stop trading the market. Learn to evaluate the price data in the major currency pairs and try to spot the support and resistance level. Once you start to study the historic price movement of the major currency pairs, you will realize that price movement are much more stable.
Trade in the higher time frame
Selecting the proper time frame is the most important factor to become a full-time position trader. Most people think they know everything about the market and thus they trade in the lower time frame. But to become a position trader, you need to trade the daily or higher time frame. And for that, you need to choose a good broker Saxo capital markets. If you chose to trade the market with the low-end brokers, you are going to lose money most of the time and thus you will never learn the importance of a higher time frame trading method.
Trade with the trend
Since the position trading method is a long-term investment, we strongly recommend that you learn to trade with the existing trend. If you intend to take the trades against the major trend, you are going to lose most of the trades. To protect your trading capital, you must use a strategic tool. Try to use the trend line tool to find the direction of the trend. You may also rely on the 100 periods moving average as it can give you a clear direction of the trend. For instance, when the slope of the 100 periods moving average is up, you should be looking for the long trade. On the contrary, when the slope is down, look for the short trading opportunity.
Manage your risk factor
Being a position trader, you need to learn the proper way to manage your risk factor. If you fail to manage the risk factors at trading, you will gradually become frustrated and quit trading. At trading, you should never risk more than 1% of your account balance. If you do so, you are going to lose money. At times you might have the urge to trade with a big lot since the trade signals will look very promising but you must not listen to your emotions. Never think you can predict the outcome of any trade with 100% accuracy. That’s why you should always systematically manage the trades and look for the quality trade signals in the higher time frame.
Trade with discipline
As a position trader, you must learn to trade the market with extreme discipline. If you break the rules and follow aggressive methods, you won’t succeed in the retail trading industry. Take your time and learn about the important market details. Trade the market with written rules so that you don’t end up overtrading. And once in a while take a small break so that you don’t get addicted to this profession. Last but not the least, never trade under heavy stress as it is one of the key reasons to break the rules.