Mid-term trading: the profitable way of an experienced trader
By popularity among traders, medium-term trading ranks second after intraday trading (day trading). Such popularity is due to good ratio of received profit to the time invested in trading. Simply speaking, a trader who practices medium-term trading spends less time as compared to a day trader, with a noticeable profitability.
The essence of medium-term trading
It takes some time to understand medium-term trading. A beginner who has come to , for some reason thinks that the more trades, the more profit. They try to scalp, trade within a day, taking 10-15 points of profit and, often, in the best case their deals bring practically zero profit which is also connected with high time and emotional expenses. And only after some time, after gaining experience, the trader chooses a quieter medium-term variant of trade.
For medium-term trading, knowledge of both technical and fundamental analysis is necessary, because an open order is held for several days, is focused on a particular trend, and the price, during this time, may be subject to fundamental pressure. However, the absence of haste in making a trading decision and the ability to clearly plan your trading tactics gives its positive effect on the results of trading.
Medium-term trader, taking into account the value of the possible drawdown must have a minimum deposit of $ 500-1000, but the appearance of almost all brokers cent accountsIn principle, levels out this requirement, making it possible to trade in the medium term with a deposit of 100-200 dollars.
It is worth noting that medium-term trading, like no other, develops the trader's global thinking and teaches him to strict adherence to trader discipline. It is not a fight for every pip, which is the essence of scalping, the goals in the medium-term trading are 100 pips and more. Freed from the need to hurry, the medium-term trader gets an opportunity to conduct a full-fledged analysis of price charts of several currency pairs, developing a clear trading plan, thereby significantly increasing the accuracy of market entry, and, accordingly, the size of the profits gained.
Note that in medium-term trading positions are open for several days. It is no secret that the situation on the currency market can change within minutes or even seconds. As a rule, by the law of meanness, it happens at the moment of trader's absence at the monitor. That is why it is very important for a trader to be able to forecast trends, as well as to set orders correctly when trading in the medium term. stop loss and take profit.
It so happened that the medium-term trading became the destiny of experienced speculators who have sufficient funds. Like any type of trading, medium-term trading has its advantages and disadvantages.
Advantages of medium-term trading
- Just one profit-closed trade brings a significant profit;
- The trader does not need to spend at the monitor all day, 2-3 times is enough to assess the situation to control;
- The trader gets to use strategies like Carry Trade and others;
- It is not necessary to use a large number of indicators, it is enough to correctly recognize the current trend and its phase;
- The trader can trade on several pairs.
Disadvantages of medium-term trading
- To trade on multiple pairs, a trader must have a decent deposit due to potentially large drawdowns;
- Because of the same potential for high drawdowns, it is not recommended to use a large leverage;
- When transferring a position to the next day, the broker charges a swap, which is often negative and, over time, reduces the profit or, in the case of failure, increases the loss.
- Testing a medium-term strategy is longer and more complex than, for example, a strategy for scalping.
Since a good trend in a trading instrument usually lasts for several days, and maybe longer, then medium-term trading allows the trader to cover the maximum price movement, which, subject to money management rules will turn a tangible profit from just one closed trade with a minimum of time spent.