Position trading in the currency exchange industry is indeed an excellent style for beginners to adopt. If you are a long-term investor, this business style may be ideal for you. Professionals never encourage the newbies to start a short-term business without gathering any knowledge about the terms, and movements because choosing a lower timeframe can be dangerous for novices.
If you don’t know what a timeframe is, let us make that clear first.
The timeframe is the duration or holding period of the financial instruments. For example, after purchasing the currency, the timeframe will determine how long you have to hold your currency for selling. The lower timeframe ranges from a few seconds to a day, and a higher timeframe ranges from several days or weeks to a month. Scalping and day trading are examples of working in the lower timeframe, while position and swing trading are examples of working in the higher timeframe.
What is position trading?
Position trading is a long-term business as traders have to hold their financial instrument for a longer period. Based on the price’s movements, the investors decide when to sell their currencies. It is like a long-term investment, and the amount of profits or losses highly depends on external factors like the GDPs, interest rates, inflation, as well as unemployment rates.
Best trading strategies for position traders
Here, we will outline the best strategies for the position of investors.
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Resistance and support plan
The levels of both support and resistance help an investor to find out whether the price of a currency is increasing or decreasing. Identifying a downtrend or uptrend is an important factor in the currency exchange industry because it will you whether you are going to make profits or face losses. In the options market, the result should never bother you. The elite traders in Hong Kong are always prepared to accept losses. They trade with discipline and they never take actions with emotions.
At the support level, the price of a currency is the lowest, and it is the spot where the buyers do their work. They buy the currencies at the lowest rate and then wait until the price increases. On the other hand, at the resistance level, the buyers become the sellers as they sell their instruments at the highest price. At this spot, the uptrend breaks down, and a downtrend starts its journey.
Sometimes analyzing the previous movements and resistance or support levels give signals to the upcoming or future conditions. There are particular technical indicators that can help rookies in this case, some of the potential indicators are dynamic and static resistance and support levels, moving averages, momentum, and so on. But among them, we advise you to use dynamic and static resistance and support level.
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Breakout strategy
This is another strategy that will help the beginners to realize whether a trend is going to continue its journey or take a downward movement too soon. A breakout may take place either above the resistance or below the support. To be an expert with this plan, the beginner has to understand the resistance and support level properly. The breakout indicates that the upcoming resistance values will be higher than the current one. At the same time, it may also indicate that the upcoming market can crash.
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Range plan
Professionals believe that it is the best trading plan and works best for the position traders. Since the industry doesn’t have any clear trend, the traders may get benefits from this process. To calculate the overbought or oversold currency, it can be an ideal choice. The objective of the novices should sell the overbought currencies and buy the oversold ones. In this situation, the oversold currency has to approach the support level, while the overbought currency is about to approach the resistance level.
These are the three major business plans for position traders, and if you are a beginner, you should follow them to develop your skills.
