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Trading Styles

Trading Styles

Richard Krivo, Trading Instructor

Student’s Question:I prefer to be a swing/position trader holding to positions over weeks and even months. My question is what is a reasonable strategy for a position trader apart from the obvious?The obvious: 1. fundamental analysis to determine upward or downward trend.-GPD growth, long term market economy etc2. Long time-frame technical analysis, trade only on trends.-Monthly & weekly charts?3. Enough margin/capital to cover short-medium term volatility-using 6 month ATR to determine margin and leverage.Does the above plan make sense?Instructor’s Response:Yes...all of what you mention would come into play...nice breakdown. You may also want to include interest rates as they are the “prime movers” of the currency market.A key will be looking for a "fresh move" back in the direction of the trend on a longer term...Daily/Weekly/Monthly chart. For example, a longer term trader could use the Weekly chart for trend determination, and then a Daily and/or 4 hour chart for timing an entry. Another thought to consider is the carry trade (going long the higher yielding currency in the pair) so that interest would be earned on the position on a daily basis. (Obviously we would only be taking these trades if they were in the direction of the longer term trend.)You may find the grid below interesting and helpful as it alludes to three of the more prevalent styles of trading along with their positives and negatives…

Trading_Styles_body_28375d1240279347-post-day-chart-4-20-09.png, Trading Styles

DailyFX provides forex news and technical analysis on the trends that influence the global currency markets.