When it comes to trading in the forex market, know that there are two types. They are none other than:
- long-term trading
- short-term trading
We understand that there might be forex beginners out there, so to give you guys a better idea, this is the definition of long-term trading. Investopedia defines it as ‘holding an asset for an extended period of time. Depending on the type of security, a long-term asset can be held for as little as one year or for as long as 30 years or more.’ Most traders generally prefer long-term over short-term trading. It’s very often mentioned that long-term trading has more benefits such as the prospective to be more moneymaking. It’s bankable. Over and above that, long-term forex trading is also known to bestow more risk control. It is also untroubled for forex newbies to learn and get established with the trading strategies.
What’s short-term trading, then?
We honestly couldn’t explain it better than Investopedia. The website states that short-term trading is exactly what its name suggest: holding an asset for short period of time. Short-time forex traders are usually people who do it as a full-time job. This is because short-time trading requires a lot of time investment. The success formula for this is to have a lot of time and a big commitment. While it is definitely a lot riskier than long-term trading, it is well known to be profitable. In a nut shell, those who wish to participate in short-term forex trading should have insanely good money management.
What Type of Forex Traders are Suited for Long-term?
On the other hand, long-term forex traders are connected with the stock market. This suits well for people who already have full-time jobs. If you think about it, these people are sort of like the jack and jill of all trades. Since long-term trade requires investors to hold on their stock for at least a year, these traders need not spend the time to worry about the stock prices. It doesn’t require a lot of attention, unlike short-term trade.
In the Long Run
Different people have different types of choices and likes. It is highly suggested to pick a trading strategy that best suits your personality. Most importantly, pick a strategy that meets your investing needs. Do you have a family? Do you have a full-time job? Or do you want to pursue a career in the forex market full time?