Forex trading strategies that work — Position trading

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.

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:

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.