Medium-term Forex trading
The standard definition of medium-term trading in Forex is limited to the period of holding a position from entry to exit within one to five days. Five days is a trading week, hence this trading is also referred to as intra-weekly trading.
The average time in stocks is from a few weeks to a few months. But since most forex traders focus on trades lasting only a few hours, the average term for Forex is defined in a different context.
Medium-Term Trading Techniques
Like with short-term trading, but on a different scale, medium-term trading involves a certain amount of risk and level of profitability. Whereas in intraday trading the profit and loss are set at 10 to 50 pips, medium term trading involves at least 100 pips of profit and 50 pips of stop.
Intraday trading is considered to be the most profitable in forex, hence it is the most popular. However, the risks of medium-term trading are much lower with comparable profitability. For the medium-term, the analysis for entering the market is carried out at least on hourly charts. Indicator indicators and trading system signals are much more reliable on higher timeframes.
Support and resistance levels formed during the past week or month are much stronger than intraday levels.
The main difference is that you should use fundamental analysis and consider macroeconomic indicators.
There are many strategies, but the most efficient ones are trend-following forex strategies.
Peculiarities of medium term trading
It takes some time for the people to comprehend the convenience and benefits of medium-term trading. Trading Forex for beginners is, as a rule, intraday trading or even scalping. Only after gaining experience yesterday's newbies choose a calmer and more secure trading option. The organization of work assumes absence of haste in technical analysis and position opening. This style enables you to better plan your trading tactics, which will positively influence your trading results.
The trading capital for a medium-term trader should be higher than for an intraday trader, because significant drawdowns are possible. These are, of course, very subjective notions. More important is the percentage ratio of possible risk to the balance.
Psychological load during the medium-term trading is much less, while observance of discipline and trading rules is easier because traders do not have to check quotations every minute, fishing out every pip.
Another useful feature of medium-term trading in Forex is that the trader's long term mindset allows for multiple entries and exits on the same movement.
Advantages and disadvantages of medium-term trading in Forex
The most important advantage of medium-term trading over intraday is that it requires much less time to analyze and monitor positions, which is especially important for those who combine Forex with other activities.
Technical analysis becomes easier and more reliable, and entries are more accurate. It's easier to trade multiple pairs, which is difficult to keep track of in the short term. Each successful trade brings a significant profit.
But this style also has disadvantages. In cases when market is moving in a narrow range for several days or even weeks, mid-term trading will not bring profit. And according to statistics prices move in the trend only 30% of the time. So one has to be patient or monitor more currency pairs.
You should also pay attention to swaps, which can reduce your profit within a few days, if their values are negative.
However, most experienced traders prefer mid-term forex strategies, as the ratio of profitability to time spent is the best here.