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What is Position Trading?

Welcome to the Investors Trading Academy talking glossary of financial terms and events. Our word of the day is “Positional trading” Positional trading is an interesting way to trade Forex online. While it can take you only a few hours a week, it could provide you with quite extensive profits. So how does positional trading work? Positional trading is all about having your positions opened for a long period of time, so you can catch some large market moves. The main rule behind positional trading is to avoid using high leverage and keep a close eye on the currency swaps, as sometimes these swaps can cost you more than the actual profit from your trading position. With positional trading, you can not only learn Forex trading strategies, but you can also learn the most needed skills for successful Forex trading. Positional trading is done over a long period of time with the aim of achieving high profits, but it can test your emotions. Traders may feel the stress of their funds being affected by short term moves - and quite often they will have to fight the urge to close their trade at times when it's losing points. With positional trading, you have to dedicate your time to analyzing the market and predicting potential market moves. However, there is almost no time spent on the execution of your trading strategy. Simply start by picking up the pair you know the most about, calculate the possible volume of your transaction, see what the swap is and how you can break even, analyze the best moment to enter the trade - and trade it. By Barry Norman, Investors Trading Academy - ITA