Understanding Position Trading (Part I)

By Ahmad Hassam

Position trading is all about taking a directional market position and holding it as long as the trade makes sense from the trend standpoint. This means that positions are held for longer term. Now there are four style of trading: Scalping, Day Trading, Swing Trading and Position Trading.

Most individual and retail traders do not have the patience for position trading. Retail traders dont have the stamina to stay longer than a few weeks in a trade. Position trading may mean keeping a trade open from one week to a month to as long as a year or possibly more in the fast moving world of forex trading.

Only those position traders who have the patience to stick with the trend and let their profits run are generally able to capitalize on these longer term price moves. This is somewhat unfortunate as most retail traders dont have that patience. Position trading can be one of the most profitable styles of trading due to the fact that many currencies tend to trend well on long term basis.

Position trading due to its long term time frame tends to rely heavily on fundamental analysis along with longer term technical analysis. This is unlike day trading or swing trading that relies almost exclusively on technical analysis due to the short time frames.

Fundamental analysis concerns itself with the economic forces that drive the major market movements. Fundamental analysis is geared towards longer term price forecasts rather than the swing to swing movements that are primarily the focus of technical analysis.

Technical analysis is based on the study of price action to predict the short term futures direction of the price action. Technical analysis is always short term in nature. The general direction of change in the currency value over the long run is what interests the position traders. This can be only done through the fundamental analysis. The economic forces that determine the long term trend of a currency include interest rates, inflation, GDP, unemployment. Fundamental analysis helps to determine the value of the national currency overtime.

Trading with the trend is what the trend traders do. Position trading and trend trading both follow almost similar approaches. However, position traders often rely on fundamentals along with the technicals; trend traders are almost exclusively technical in nature.

Carry trading can be considered a form of position trading as carry traders hold interest positive positions to benefit from both regular interest payments and exchange rate profits. How do position traders decide which position to take?

Fundamental analysis exclusively! Position traders establish positions on currency pairs according to their views and experience based on fundamental analysis. Forex position traders weigh strength and weaknesses in currencies by taking various fundamental and technical factors into account.

Lets take an example. Suppose that a position trader has performed fundamental analysis on economic conditions surrounding the major currency pairs that involve the US Dollar on either side of the pair. The position trader is of the opinion keeping in view the present recession in the US economy that the US Dollar is indicating fundamental weakness going forward.

This opinion may have been formed on the state of inflationary pressure in the economy, the recent rate of economic growth, comments by the Federal Reserve Board (FED) Chairman or the President of European Central Bank (ECB), the state of ongoing recession and so on. At the same time, the position trader thinks that the Euro is showing significant fundamental strength going forward. - 23199

About the Author:

Mr. Ahmad Hassam is a Harvard University Graduate. He is interested in day trading stocks and currencies. Try Strignano's Forex Signals free. Discover a revolutionary Forex Robot Trading System!

Position Trading Explained (Part II)

By Ahmad Hassam

After performing the fundamental analysis, the trader may be confident that the US Dollar is indicating overall weakness and the Euro is indicating overall strength for the coming six months.

The next step for the position trader would be to open a long position in EUR/USD pair. This simultaneously provides the position trader with long Euro position and a short US Dollar position.

The long term directional bias has been formed by the position trader on the basis of fundamental analysis. Going long on Euro and at the same time short on US Dollar, this combined trading position fulfills the fundamental outlook of the position trader on both the currencies.

So position trading depends on using fundamental analysis in identifying a profitable position in the currency market and then using technical analysis in setting up the actual trade. However, pinpointing the best time for the trade entry as well as setting risk managed control strategies is best accomplished by using technical analysis.

Now this concept of strength/weakness fits extremely well with the forex markets as all currencies are traded in pairs unlike the stock market or for that matter other financial markets. The position trading uses fundamental analysis in pairing strength with weakness.

Trading forex requires a directional commitment on two currencies for each trade, so position trading is ideal for forex trading. Position trading with the strength/weakness model is the most logical fundamental method for approaching long term forex trading.

You only invest in stocks that go up and down but two stocks can never be paired together in stock trading. You can buy different stocks to diversify your portfolio but can never pair two individual stocks the way you can pair two currencies in forex trading. Buying one currency because it looks like it will become stronger while simultaneously selling another currency because it looks like it will become weaker is a better way to trade as compared to stocks and other financial markets.

What should be your first step to identify a strong/weak pair? Your first step as a position trader should be analyze the Central Bank policy statements, economic growth factors of these countries, global economic news etc to identify the currency with the strongest positive future prospects and the currency with the strongest negative future prospects at a given point in time. You will have to do fundamental research and analysis on all major currency pairs as a position trader.

Suppose you identify AUD and JPY as the strongest gainer currencies in the foreseeable future while CAD and CHF as the strongest loser currencies by performing fundamental analysis. Possible currency pairs for position trading could be long AUD/CAD, long AUD/CHF, short CAD/JPY and short CHF/JPY.

After this, you can enter the trades with the help of technical analysis and hold them as long as they move in the correct direction disregarding minor corrective swings and market noise because the price action is never ever linear. It is always up and down with minor trends superimposed on major trends.

If done properly, position trading can be one of the most effective methods of extracting long term profits from the forex markets. Position trading maybe the most difficult method of approaching forex trading for the beginners and inexperienced traders! It requires a great deal of patience and faith in ones own analysis to weather the inevitable swings against the trading position. Do you have the patience to become a successful position trader? - 23199

About the Author:

Mr. Ahmad Hassam is a Harvard University Graduate. He is interested in day trading stocks and currencies. Try Strignano's Forex Signals free. Discover a revolutionary Forex Robot Trading System!

Forex Trading Tips 5 Success Tips

By Mark Green

Forex trading tips today can be hard to decipher with all the information on the internet. You should know by now that good information is hard to find. This is why I have taken it upon myself to arrange 5 tips to success that are a great starting point for any trader.

First of five forex trading tips is dedication. In order to achieve success, a trader must be dedicated to their trading. If one spent time in research and world news they would be dedicated. Dedication leads to progress and progress leads to success. How much one trader wants to succeed is dependent on the level of dedication.

Second of the forex trading tips is persistence. Don't be a quitter and give up before you have put in some honest hard work. Going into forex with an over night success in your mind is a sure way to failure. Most new forex traders have a problem with this vision, and drive them to rush things. Success is built over time, you must think of it as a long term goal, or achievement.

Third forex trading tips, finding a method of trading that works for you. Long term testing of the different strategies is important to achieving accurate results. These results will help determine if the method is for you or not. Calculate your profits on a rolling average, it constantly fluctuates. Win more trades then you lose. and you will be fine.

Fourth in the forex trading tips is proper money management. One must properly manage their money in order to achieve success. Hitting trades with an entire trading account is a very risky move, which may quickly lead to a destroyed trading account. Using small margins at first to keep things in control is what money management is all about.

Fifth in the forex trading tips is to manage and research your trades. Watch trades start to finish and be sure you are well researched and prepared. Doing short trades (also known as scalping) it is essential that you prepare before you hit the market. Long term trades are good for long term, but when starting out a trader needs to quickly get experience and build their trading account. If you are looking for one of the easiest managed, best systems on the market. You need to see how the big money makers do it, take a step forward to success and act today on discovering what they try to hide! - 23199

About the Author:

If you truly want to get out of the ditch and make a buck, check out the "Big Wigs" Forex Trading Tips. If you have read up to this point and you want to make real profits for your self, stop letting the "Big Wigs" spoon feed you baby steps, find out their secret Forex Trading Tips.

Finding Affordable Financial Advice

By Richard Moran

A professional financial advisor may be easier to find than you realize. All the investment firms have them on staff as well as most of the banks. If your finances are large or complicated you may want to consider contracting with an independent financial advisor to guide you through the maze of investments available.

How Should You Start

If you needs are no very complicated I would suggest you first start with the phone book. Contact several firms/persons list there and see what they may offer. If you feel a more sophisticated solution is necessary call on your bank, broker, or accountant to recommend firms/people to you. The more complicated your finances become the more likely a real pro will be necessary. Some firms/advisors will charge a flat fee, while others will work on a percentage. First get a quote for the initial conference and see how comfortable you are with the advisor. If you account has a high potential normally there won't be any fee for this initial contact.

Check with friends and business associates.

You may have friends or business partners that have had good experiences with a particular advisor. Doing this may find a good prospect for you and it may also steer you away from a charlatan. Many times if an advisor get clients by referral either you or your friend can receive a discount on the services.

Check Out The Prospects

Once you have found someone that you think you would like to work with, you can take their information to the Internet. This way you will be able to find out anyone else's experiences with them. This will help you to pick the right person for your needs and help you to save some money in the long run.

Most of the financial websites that are independent will have unbiased appraisals of both firms and particular professional advisors. There are many websites by "celebrity" advisors such as Jim Cramer who give advice directly on the internet or through their websites. Chat rooms, blogs, or forums often address peoples experience with particular firms or advisors. Don't expect all good things, everyone has some detractors in the world. With this method you should be able to cull out the better candidates.

Getting financial help doesn't have to be hard if you are able to find the right person and you are willing to really look at what may be going on with the financial area of your life. Taking the time to really look into it will help you to understand what you are going to need to do well before you start investing the money that you make and are trying to save for later in life. - 23199

About the Author:

Richard Moran is a Financial Consultant and maven for Money Helpers. The Blog contains hundreds of articles, charts, and calculators to aid you in your financial health. All the aspects of the Blog are free and it is updated on an almost daily basis. If you are looking for any financial information or products they can be found on Money Helpers.

Forex Strategies Manage Your Money

By Chris Green

When looking at forex strategies, a good one to adapt is one called money management. It may sound simple enough, but it isn't. One of the most important strategies in forex is managing your money properly. Knowing the amount of your trading account to keep tied up in a trade is very important. It is never a good idea to put all of your money into one trade, this is a very high risk bad move. You may luck out and make a huge profit, but it won't be long before you find yourself angry with an empty trading account or even worse, debt!

Money management is one of the first forex strategies you should get mastered. Without proper money management, it can make the difference between powerful trades and bad trades. At any given time it would be good to only use a maximum of half of your account on trades. When it comes to how many trades you should be doing, it would be recommended that you do what you are only comfortable with.

Learning a few forex strategies first, or even just starting off with money management is very important for any trader. Getting this mastered is not hard, once you do trading will be at a lowered risk level. Being in over your head, frustrated with too many trades is never a good position. This should not become a habit, once in this situation, it is never easy to recover.

If you are looking for other places for forex strategies, why not try to connect with people. Make some friends in the same industry, doing this will give you many advantages. After chatting and getting to know people in the industry, they will tell you great information, little secrets or tips that could have take you years of trial and error to figure out. This is a huge advantage, and can quickly accelerate you ahead of other traders. Test the new strategy to make sure it works for you, if it does, stick with it.

Before you know it, your forex strategies will be tested results that you know for yourself. When you have a handful of good strategic approaches down, you will find that trades are easier, profits will soar, and you will enjoy your time into forex more. One way to give your self an instant edge over the rest is to get a strategy that is new, or hard to find out about. After a long time of testing and searching, the ultimate strategic approach was found. - 23199

About the Author:

If you want to get out of the ditch and make a buck, check out the "Big Wigs" Forex Strategies. If you had enough bull fed to you, and you want to make real profits for your self, stop letting the "Big Wigs" spoon feed you information, find out their dominating Forex Strategies.