This article looks at the use of passive trading on the foreign exchange Singapore.
There are two ways that you can trade on the foreign exchange Singapore and one of them is through the use of passive trading. Passive trading is a way of trading that does not appeal to all traders. It is important that you understand what passive trading is and whether or not you are going to be able to trade on this manner. There are a number of points that you should look at when you consider passive trading from what this is to the way you can complete this to the advantages of passive trading on the foreign exchange Singapore.
Who Should Use Passive Trading on the Foreign Exchange Singapore
When you consider passive trading you need to consider whether or not this is right for you. Passive trading should be viewed as an investment in the currency pair that you are trading. This is due to the long-term nature of passive trading. If you are not comfortable with trading on the long-term then passive trading will not be the right option for you.
Passive traders are willing to complete the long-term analysis that they need to in order to see their trades mature over a prolonged period of time. When you look at passive trading you will be holding your trade for weeks. There are some passive traders who have held onto an open position for months before they realise the profits that they want.
The Use of Passive Trading
Passive trading relies on the movement of the market being directional for a prolonged period of time. If there is no directional movement on the market over the long-term then you are not going to be able to make a profit with passive trading. This need for directional movement brings two critical factors to passive trading.
The first factor is that you need to use currency pairs that have a long-term trend. The best way to determine the long-term trend is through long-term technical analysis. It is possible to look at fundamental analysis as well, but this needs to be combined with the technical analysis that you are going to complete.
The second factor is that you will need to have more than one currency pair that you trade. While you will not be opening a lot of trades on the market you could have a problem if you are looking at a single currency pair. There are some brokers that will not allow you to open more than one trade on a single currency pair. They will want you to scale into the trade you already have. If you have more than one currency pair to trade then you will not have to worry about this.
The Advantages of Passive Trading
All trading systems and methods will have advantages that you need to know about. The primary advantage is that when you use passive trading correctly you can make a large profit on a single trade. The risks that you face with your trade are also generally lower when you are looking at passive trading because you do not have to increase the profits through risk.