So you want to be a long-term trader and are finally taking some trades. After getting the perfect entry you think well how long can I hold this trade if it keeps going up or down and trending? That thought has crossed my mind quite a bit and until now I really had no idea.
What is the longest you can hold a trade in Forex? The simple answer is as long as you want! There is no time limit but some things to look at would be swaps and other fees your broker carries that would hinder small gains of holding.
The main thing to look at with your broker is swaps. If you don’t know what swaps are it is pretty just a fee for holding trades and where it differs from a normal fee it can work in your favor where you are making money off swaps. Check out here for more info on swaps. Other factors are which timeframe you entered on or did your analysis.
A general guideline I follow is this:
1hr entry: hold for at least an hour to a day
4hr entry: hold for at least 4 hours to 2-3 days
Daily entry: hold for at least 1 day to weeks
These are just general and I what I have followed and traded in the past. Anyone that knows how I trade now knows I normally enter most all my traded on 15M or less but still do some of my longer term trades on the 1 hour timeframe. I also close most all my trades out by the end of day or at least back end of week. Then I will look for re-entry the following week if the trade is looking that good still.
There are times like with USD or GBP pairs where you can hold for a longer term then days or weeks. These kinds of trades are nice to have running then just keep moving your stop loss (I like to say stop profit at this point) up so you keep locking in profits along the way. Then what I like to do as well is trade the retracements because for me this is the only way to hedge (check out hedging in profit article).
Other factors would of course if you are approaching major resistance which leaves you with a lot of options. Closing some profits at that point or you can just move your stop loss up like previously mentioned.
As always make sure you demo trade before trying out new strategies. You can always twin trade with a live and demo account.
How to Hold Forex Positions Overnight?
There are many reasons why you would want to hold a trade overnight that include you are seeing continued strength/weakness signs or you take profit has still got a long way to go.
How do you go about doing this?
- First things first double check your stop loss and make sure it is where you want it to be.
- Next see what the swap points of your broker are this varies based on broker and interest rates of countries
- If you do see a support/resistance are coming up then maybe lock in additional profits
- Think about setting what is called a trailing stop which can be done easily in MT4 or with an EA
- Check for possible news. If there is some big news coming you may want to re-consider as spreads will usually jump around big news and the trade can also go against you.
Those are just some things to consider. There is also the possibility that you are trying to recover from a losing trade which is up to you but I wouldn’t move your stop loss to make sure you stay in the trade especially if you are just starting out with trading.
How long should you stay in a forex trade?
This question has many variables but for the most part it comes down to your initial analysis. If it is going against your initial analysis then maybe you will want to get out sooner. I would highly advise again against moving your stop loss I have been there and it is a very emotional situation to deal with when you are losing. That is the biggest reason you shouldn’t be trading is when you are emotionally trading. You need to learn to trade like a robot and that will come with due time.
If you trade is hitting a major support/resistance are make sure you can watch the price action if possible if not move your SL up or look to take partial profits at that area.
Don’t let emotion take you out of a trade too early this more or less boils down to mindset and something that traders have issues with.
I mostly use moving averages and an indicator called the Hull Moving Average to exit my trades which works on any time frame and make that analyzing multiple timeframes at the same time. If you want to see what I am talking about check it out HERE.
Forex trading long-term
Now this is something I do not do on the regular but with being a full-time stay at home dad I like taking longer-term trades as well so I can spend more time focusing on my daughter. Earlier in the week I will take longer term trades so if I just happen to take the week off I still have some hopefully winning trades running.
You will be trading mostly off the 4HR and Daily for longer-term trades. The main strategy I use for this is called the Bounceback Strategy which you can find HERE or in the menu above which is absolutely free to use and you can start demoing right away.
I will say I still use the Hull Moving Average still as an exit the majority of the time because it is very consistent and you only normally get around 23% erosion which is really good in my opinion.
Get a strategy together that you enjoy for longer term trading this may be based on Price Action and Volume for example and go demo it.
Long-term trades can be a lot of fun especially once you are well in profit there are a lot of free strategies out there you can learn and demo so the Bounce Back is only one of those.