Medium Term Trading Strategy Explained

8

Mid-term trading is the second after intraday trading (day trading) by popularity among the Forex traders. Such popularity is due to a good ratio of profits to the time invested in trading. Simply put, compared to a day trader, a trader who practices a mid-term trading spends less time with tangible returns.

Before reading the article and writing your questions in comments section, I recommend to watch this video. It’s not long, but covers biggest part of questions on the topic.

THE ESSENCE OF MID-TERM TRADING

Understanding of the mid-term trading does not come immediately. A newcomer who came to Forex, for some reason believes that the more deals, the greater the profit. He tries to scalp, trades within a day, catching 10-15 points of profit and, often, at best, the mass of his deals brings almost zero profit, coupled, moreover, with high time and emotional costs. And only after some time, after having gained some experience, the trader chooses a more peaceful mid-term option of trading.

For mid-term trading, it is necessary to know both technical and fundamental analysis, since an open warrant is held for several days, is oriented to a certain trend, and the price, during this time, may be subject to fundamental pressure. However, the lack of haste in making a trading decision and the ability to clearly plan your trading tactics has a positive effect on the results.

A mid-term trader, taking into account the amount of possible drawdown, should have a minimum deposit of 500-1000 dollars, however, the appearance of cent accounts almost at all brokers, in principle, eliminates this requirement, giving the opportunity to trade in the mid-term with a deposit of $ 100-200.

It is worth noting that the mid-term type of trading, like no other, develops the global thinking of a trader and accustoms him to strict observance of the discipline. This is not a struggle for every item that is the essence of scalping, the goals in the mid-term trade are from 100 points and higher. Eliminated from the need to hurry, the mid-term trader gets the opportunity to conduct a full analysis of the price charts of several currency pairs, having developed a clear trading plan, thereby significantly increasing the accuracy of entering the market, and, accordingly, the size of the profit.

 

Note that in the mid-term trading, positions are open for a few days. It’s not a secret that the situation on the foreign exchange market can change within a few minutes or even seconds. As a rule, according to the law of meanness, this happens when a trader does not have a monitor. Therefore, with a mid-term trading, it is very important for a trader to be able to forecast trends, and also correctly establish stop-loss and take-profit orders.

It so happened that mid-term trading has become the lot of experienced speculators who have sufficient funds. Like any type of Forex trading, mid-term trading has advantages and disadvantages.

ADVANTAGES OF MID-TERM TRADING

  • only one profit-maximized deal brings a significant profit;
  • a trader does not need to spend the whole day at the monitor, it is enough to assess the situation for control 2-3 times;
  • a trader gets the opportunity to use strategies such as 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;
  • a trader can trade in several pairs.

DISADVANTAGES OF MID-TERM TRADING

  • For trading in several pairs, a trader must have a decent deposit due to potentially large drawdowns;
  • in view of the same potential for high drawdowns, the use of large leverage is not recommended;
  • when the position is transferred to the next day, a broker charges a swap, which, often, is negative, and, with the passage of time, reduces profit or, in case of failure, increases the loss.
  • testing of the mid-term Forex strategy takes longer and more difficult than, for example, strategies for scalping.

Since a good trend in a trading instrument usually lasts for several days, and maybe longer, the mid-term trade allows the trader to capture a maximum of price movement, which, if the management rules are observed, will result in a tangible profit with just one closed deal, with a minimum of time spent.

 

8 COMMENTS

  1. You have completely changed my mindset….. I have been scalping but I now realize scalping is a bad idea

  2. I started my trading career a month ago. I have been reading your articles and I have a question… I this strategy fit for beginners like me?

LEAVE A REPLY