Position trading is a special step for commercials when a customer leaves the market open for a long period. Sometimes it takes up to a few years, but it takes a very large deposit. The risk probability is very low, but if something goes wrong, the investor loses everything. Positional trading has some similarities to investment.
Position traders act differently: they do not in any way disregard technical conditions, but only work for a long time: a week or a month period. Nevertheless, technical analysis remains peripheral to such trade — the fundamental one comes first. It is believed that the ability to distinguish important economic news from unworthy news is the most important quality of a position trader.
Each type of trade has its advantages and disadvantages. The advantages of commercial placement include:
· Minimum degree of influence of negative conditions. If an investor trades, for example, on a weekly schedule, it will not be horrified by day-to-day price fluctuations. In this also the advantage of positional trading — the trader experiences not much stress.
· The opportunity to get the most out of the term. In positional trading, speculators do not have to regularly open and close positions, losing on spreads. Also worth noting is the high earnings. Far traders trade with high credit leverage — they can afford it, as the probability of error is smaller than in traditional trading.
At the same time, long-term trade has its downsides, such as the need for a high deposit. A position commercial with a minimum amount of funds in the account is simply inappropriate — there is a strong probability that with a strong cost change the speculator will drop everything. The probability of error is low, but if it occurs, it is likely to be fatality. If the investor goes through the term, it will not only lose the down payment, but also the time it could increase its funds.
The most important requirement is a big deposit. Fluctuations over a long term of time may be very significant, so if the deposit is small, there is a very high probability of getting out of the game with a margin of call.
An investor who prefers to position trading in this way should be able to watch indifferently as he loses money. The question is still the same: the probability of large market fluctuations.
We also need excellent knowledge of the commercial and the contracts that are traded. If assets are currency pairs, we need to know what their movements are. If assets are stocks, you need to be able to analyze company records. In both cases, the trader must monitor the political situation in the country where the company is registered or to which the currency pair belongs.