Forex: short or long positions?

Hello аƖƖ,
Sο, I wonder wһу ѕο many people speculate wіtһ day trading іח tһе forex market wһеח уου сουƖԁ easily determine tһе trend οf tһе EUR/USD аחԁ tһеח јυѕt bυу ѕοmе EUR….аftеr a few months уου ѕһουƖԁ һаνе several hundreds pips gain.
Tο bе һοחеѕt, I аm חеw аt tһе forex market аחԁ tһіѕ іѕ one οf tһе few things I still don’t understand аt аƖƖ…аחԁ probably tһіѕ іѕ one οf tһе mοѕt іmрοrtаחt раrtѕ аt аƖƖ οf tһе Forex market.

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7 Responses to “Forex: short or long positions?”

javier c:

May 10, 2010 at 10:14 am

short
Frank Castle:

May 10, 2010 at 11:12 am

If you can easily determine the trend of the EUR/USD then you should work for me.

Will you take $100,000.00 USD per year for starters?

Top 5 Answerer.
besthusbandever:

May 10, 2010 at 11:23 am

I don’t trade the forex market, but I can tell you that if you are any good at seeing a trend in any kind of market you can make lots of money…..but remember, it is very easy to look at a chart and see what has happened in the past………but it is very hard to predict the future, which is what everyone that is trading is trying to do. if you think it is easy, you are in for a quick education on how hard it is. if it was easy everyone would be rich.
SketchySam:

May 10, 2010 at 12:13 pm

What really hurts most speculators is the leverage they use, so holding a position for the long term makes it very risky unless your well funded.
Ivar:

May 10, 2010 at 1:07 pm

I certainly think you got the right idea regardless of whatever market you invest in. I too believe that the best we can do is to try out best to determine which way the major trend is and go with it.
VP:

May 10, 2010 at 2:03 pm

Hi

Actually everything is not as simple as it looks from first view. Yes, everything looks very nice in the historical data but absolutely different is when you have to determinate market movement for next step. Just try it on demo account and you’ll see that it is not so easy.

Yes, you can trade monthly if you have huge trading amount and high risk is comfortable to you.

We all know that EURUSD daily average is about 100-120 pips. Weekly average is 200-400 pips, Monthly average is 400-600 pips. Accordingly stop loss orders should be higher for longer term trades

So every trader chooses trading style that conforms to his/her character, funds and allowed risk.

Furthermore forex is volatile market so every trend is formed from several shorter term trends accordingly those shorter trends are formed with several more shorter term trends and etc. Therefore there are different term traders

Actually day trading is most profitable. Sometimes especially after important fundamental news it moves more than 100 pips in 1-2 hours. So you could earn at least 100 pips on one movement. But if you would choose smart way for entry then is possible increase profit even twice. At least once per week such movement is available.

So day traders need fewer funds to receive higher income with more comfortable stop loss.

As you are newbie I think following books would be useful for you.

Market Wizards by Jack D. Schwager;
Technical Analysis by Jack D. Schwager;

Comprehensive Course on The Wave Principle by A.J. Frost and Robert Prechter;

Candlestick Charting Explained- Timeless Techniques for Trading Stocks and Futures by Gregory L. Morris;

Trading Chaos – Applying Expert Techniques to Maximize Your Profit by Bill M. Williams;
New Trading Dimensions by Bill M. Williams
Trading Chaos II by Bill Williams – Maximize Profits with Proven Technical Techniques by Justin Gregory-Williams and Bill M. Williams

Good luck!
Robert L:

May 10, 2010 at 2:38 pm

For long term strategy shorting the dollar against the euro and/or GBP is the way to go.

The problem is that for carry trades (overnight positions) you pay the interest differential with most brokers and depending when you enter the market you may experience some drawdown during retracement periods.

In the short term you can make pretty good money during retracements by going long the dollar when the conditions are right for a retracement.

My strategy is simple actually.

I short the dollar for long term and when I see retracement begin to occur I open a long in the dollar against my short. when the trend against the dollar resumes, I close the long and open another short at the lower price.

This puts me in the market in a couple of price points and gives me a lower blended price on the overall position (not to mention I make pretty good money on the short term retracement long.)

Just be careful of temporary drawdown and dont buy too large of a position at one time or you could get margin called.