Trading Forex is typically associated with a fast-pace high-volatility type of trading. In fact, in most cases it is. But not everyone has so much time or wants to spend it before a chart. And that is just fine. That is why trading long-term is still a valuable alternative.
Let’s presume you are just given your first steps in Forex. So you open a real account with $500 and after learning the basics, you understand you do not have enough time to spend on it. What do you do? Nope. You don’t cash out. You apply a long-term strategy. Simple: keep and hold.
The tricky thing about a keep-and-hold strategy is that you should really work hard to improve risk management to its best possible in order to not fall into badly executed orders.
In other words: if you open a position and set stop limits too close or too far of the price, then you could face an early close or extremely painful losses.
Trading long-term means setting long-term objectives. You have to focus on a larger picture. Work with wider timeframes, like 1 week, 1 month or even 1 year. All depending on what is your ability to read those charts and correctly forecast price action.
No matter if you are working as a daytrader or just intending to make a few extra bucks as a long-term trader, you cannot lose vision on your trading. However, as a long-term trader your control can take place not so often. For example, twice or once per week would be ideal.
In general terms, applying a long-term strategy would demand you to focus more on fundamental changes than technical ones. But knowing where key supports and resistances are placed will not hurt anybody. The more you know, the more you make. That rule never fails.
As for capital. Long-term trader requires a bit more than a day-to-day trading account. The reason is obvious. If your positions need space to move freely up and down for some time, then that space is call money, sometimes negative for you. Yes, I am taking about margin