3 Advantages of Long-Term Forex Trading
As a long-standing supporter and practitioner of long-term Forex trading it is hard for me to judge this style of trading objectively, but pointing out the advantages is an easy task in my case. Apart from the obvious subjective advantages, that are appealing to certain features of a trader's personality, long-term Forex trading has some features that can be good for everyone:
- Spread economy. If you trade on long-term periods, you tend to get more than 100-200 pips from each position, whereas if you trade on short-term periods, your trades will rarely go beyond 50 pips in profit. Assume your broker has a 1 pip spread, and you make 2,000 pips a month with it (more optimism!). With 10 profitable trades yielding 200 pips each, you get 2,000 pips of profit minus 10 pips paid in spread to your broker — that is 0.5% of your total gain lost to spreads. With 100 trades yielding 20 pips each, you get 2,000 pips minus 100 pips left to the broker in spreads — that is 5%.
- Resistance to short-term volatility. Long-term Forex traders do not have to worry about stop-hunting or intraday spikes. Their positions are safe from the usual daily market volatility. If you trade long-term, you always have enough time to change the parameters of your position when something important happens.
- Long-term trading is simple. To trade successfully on long periods, you have to forecast the general trend and the possible exit points. On long-term charts, that is rarely a difficult thing to do. And since you trade rarely, you will not need to make decisions too often, while in short-term trading, you have to develop complex strategies to succeed.
I cannot make you switch to long-term Forex trading if you do not like it, and the majority of traders enjoy short-term trading. But now at least, you know the advantages of the other trading style. If you experience difficulties trading inside the day, you could always switch to long-term trading.