Medium-term positions are typically held for periods ranginganywhere from a few minutes to a few hours, but usually notmuch longer than a day. Just as with short-term trading, thekey distinction for medium-term forex trading is not the lengthof time the position is open, but the amount of pips you’reseeking/risking.Where short-term forex trading looks to profit from the routinenoise of minor price fluctuations, almost without regard forthe overall direction of the market, medium-term tradingseeks to get the overall direction right and profit from moresignificant currency rate moves.
Almost as many currency speculators fall into the mediumtermcategory (sometimes referred to as momentum tradingand swing trading) as fall into the short-term trading category.Medium-term trading requires many of the same skills asshort-term trading, especially when it comes to entering/exiting positions, but it also demands a broader perspective,greater analytical effort, and a lot more patience.
Capturing forex intraday price moves for maximum effectThe essence of medium-term trading is determining where acurrency pair is likely to go over the next several hours ordays and constructing a trading strategy to exploit that view.Medium-term traders typically pursue one of the followingoverall approaches, with plenty of room to combine strategies:
1> Trading a view: Having a fundamental-based opinion onwhich way a forex currency pair is likely to move. View tradesare typically based on prevailing market themes, likeinterest rate expectations or economic growth trends.View traders still need to be aware of technical levels aspart of an overall trading plan.
2> Trading the technicals: Basing your market outlook onchart patterns, trend lines, support and resistance levels,and momentum studies. Technical traders typically spota trade opportunity on their charts, but they still need tobe aware of fundamental events, because they’re the catalystsfor many breaks of technical levels.
3> Trading events and data: Basing positions on expectedoutcomes of events, like a central bank rate decision or aG7 meeting, or individual data reports. Event/data traderstypically open positions well in advance of events andclose them when the outcome is known.
4> Trading with the flow: Forex trading based on overall marketdirection (trend) or information of major buying and selling(flows). To trade on flow information, look for a brokerthat offers market flow commentary. Flow traders tend to stay out of shorttermrange-bound markets and jump in only when amarket move is under way.
Almost as many currency speculators fall into the mediumtermcategory (sometimes referred to as momentum tradingand swing trading) as fall into the short-term trading category.Medium-term trading requires many of the same skills asshort-term trading, especially when it comes to entering/exiting positions, but it also demands a broader perspective,greater analytical effort, and a lot more patience.
Capturing forex intraday price moves for maximum effectThe essence of medium-term trading is determining where acurrency pair is likely to go over the next several hours ordays and constructing a trading strategy to exploit that view.Medium-term traders typically pursue one of the followingoverall approaches, with plenty of room to combine strategies:
1> Trading a view: Having a fundamental-based opinion onwhich way a forex currency pair is likely to move. View tradesare typically based on prevailing market themes, likeinterest rate expectations or economic growth trends.View traders still need to be aware of technical levels aspart of an overall trading plan.
2> Trading the technicals: Basing your market outlook onchart patterns, trend lines, support and resistance levels,and momentum studies. Technical traders typically spota trade opportunity on their charts, but they still need tobe aware of fundamental events, because they’re the catalystsfor many breaks of technical levels.
3> Trading events and data: Basing positions on expectedoutcomes of events, like a central bank rate decision or aG7 meeting, or individual data reports. Event/data traderstypically open positions well in advance of events andclose them when the outcome is known.
4> Trading with the flow: Forex trading based on overall marketdirection (trend) or information of major buying and selling(flows). To trade on flow information, look for a brokerthat offers market flow commentary. Flow traders tend to stay out of shorttermrange-bound markets and jump in only when amarket move is under way.
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