Short, Middle or Long term investment on Forex?
The question seems simple but the answer is not. It depends on your personality. Only you can know or discover on which period you feel better. For me it is the medium term. This is the period that appears to me the easiest to trade. This is not by risk aversion, or incapacity, but simply because that’s where I earn the most money. So it’s up to you to find your period. However, the following can help you to find quickly what suit you the best. There are 3 periods, long-term, medium term and short term.
Long Term Investment :
The long term can range from a few weeks to several months or even years. Therefore you use daily and weekly charts. This is macroeconomic data on any particular currency trade that will make you win or lose a trade.
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Pros:
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> No need to stay in front of your computer |
| > Lower transactions fees (not so much order) | |
| > Your will of the day is not depending on the market (low stress) | |
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Cons:
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> Stop-loss very far to avoid being executed on a correction of the market |
| > You need to be patient | |
| > Require important funds to support big variation of the market | |
| > Usual weekly and monthly losses |
Middle Term Investment :
The middle term can range from few hours to several days. Therefore you use hourly charts. This is the trend of the week that will make you win or lose a trade most of the time.
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Pros :
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> More opportunities to trade |
| > Less chances to lose in a month | |
| > Possibility to diversify your portfolio. | |
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Cons :
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> Important transaction fees |
| > Overnight risk | |
| > Necessity to keep an eye regularly on the market | |
| > High stress |
Short Term Investment :
The short term can range from few minutes to several hours. Therefore you use minute’s charts. This is your faculty to pick out chart patterns that will make you win or lose a trade most of the time.
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Pros :
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> A lot of opportunities |
| > No overnight risk | |
| > Result of the trade quickly known | |
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Cons :
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> Tremendous stress |
| > Need of time | |
| > Limited profits (Losses also) | |
| > High transactions fees (a lot of orders) |
As you can see, no time period is perfect but there are one appropriate for each person. It’s up to you to find it. To know you better play with a demo account on the different periods (the long term is likely to be too much longer … but if you see that the two others do not suit you, then you’re done for the long term.) Many people lose a lot of money because they want to win too quickly. Not everyone is made for the short term. You can earn the same by trading in the long term, the medium or the short term.
