The position trader
t is playing fundamental direction and is seeking very large
moves of 150 to 300 pips. This trader doesn’t want to sit and watch
the screen but play the longer moves and forces behind forex. This
requires trading daily, and even weekly charts and setting with risk
control to target a 3-to-1 ratio of pip profits over losses.
Position traders are
usually sophisticated investors with two distinct characteristics:
Their astute reading of the fi nancial markets makes them totally
unconcerned with the short-term or even the medium-term move- ments
of the currency market, and they own a large trading account. This
size is necessary because
capital is needed to withstand large floating losses should trades go
against the trader for an extended period of time.
Position trading offers
these top three advantages:
Lower transaction costs.
Brokers charge a spread for every position executed in the forex
market. Thus, scalpers incur the highest costs by virtue of their
trading frequency. Position traders are on the opposite end of the
pole.
One disadvantage is
psychological. Set-and-forget trades are slow and take a long time to
complete. In contrast, an advantage is that all it takes is three out
of seven wins to be profitable.
The trader wants to enter
on the side of the predominant trend, put on the trade with proper
limits and targets. Channel and patterns fit this style.
 |
| Position Trader |
Post a Comment