Any position in the Forex market is opened with the aim of obtaining profit. How long a position is open depends on the desire of a trader and a margin (the position can be closed automatically if there are not enough funds to maintain it). That is, the trader himself decides how long his position will be open.
Also, entering a position, one should consider swaps. A swap is a fee for moving positions overnight. They can be positive and bring some little additional profit but may be negative as well.
Types of traders according to the duration of positions
The ability to determine the optimal points for opening and closing a position directly influences the effectiveness of trading. The duration of holding an open position has great importance, so beginning traders often have a question: “How long should I keep the position open?”.
The Forex market offers many opportunities for various types of traders. Depending on the chosen trading style, the duration of a position can vary from several minutes to several days. But, all traders, depending on what time period they choose, can be divided into four main categories:
- intraday traders;
- swing traders;
- position traders.
Scalpers can make a profit from any price movement. A typical trading style is a large number of transactions with a profit or loss of just a few points. They prefer to work on minute charts. They do not rise above the half-hour timeframes. Aggressive scalpers can enter the market with large volumes of contracts.
They make deals exclusively during the day. All open trades are closed before nightfall. Day traders especially carefully monitor the possible risks, and all transactions that are carried out by such market participants last in the range from a few minutes to several hours. Day traders prefer not to work above 4-hour charts.
Swing traders assume that the transaction will be open from a few days to a couple of weeks. Their main task is to use the medium-term perspective, which allows them to get a stable income. Swing traders, as well as intraday speculators, rely mainly on technical analysis methods, trying to find an entry point that will be located close to the support level.
These traders take advantage of global trends. To identify them, position traders pay their attention to the fundamental factors that underlie the trading approach. Usually, W1 and sometimes larger timeframes are used as time intervals for analysis. For position traders, it is quite normal to hold a position for half a year-year. When analyzing the situation, they are guided by the size of interest rates and the main macroeconomic indicators of those countries whose currencies they use in trading.
So, the duration of an open position depends on your goals and your strategy. It can be open from a second to several years. Choose a pattern of behaviour that suits you best, afterwards turn your knowledge into practice in Forex trading. If you’re not sure or haven’t enough experience in Forex market, practice on Demo account then. The usage is free while the registration is quite simple, you’re only shall enter your email address.