Position trading is the longest-term trading and can have trades that last for several months to several years!

Position traders ignore short-term price movements in favor of pinpointing and profiting from longer-term trends.

It is this type of trading that most closely resembles “investing”.

The crucial difference is in markets outside forex, “investing” usually means you hold positions that are long.

This kind of forex trading is reserved for super PATIENT traders and requires a good understanding of the fundamentals.

Because position trading is held for so long, fundamental themes will be the predominant focus when analyzing the markets.

Understanding the Fundamentals.

Fundamentals dictate the long-term trends of currency pairs and it is important that you understand how economic data affects your countries and their future outlook.

Because of the lengthy holding time of your trades, your stop losses will be very large.

This means that your losses can end up being huge, but it also means your profits can be yuuuuge (“huge” in Trumpglish).

You must make sure you are well-capitalized or you will most likely get margin called.For an idea of how much money you should have in your trading account, check out our risk management lesson.

Position trading also requires thick skin because it is almost guaranteed that your trades will go against you at one point or another.

These won’t just be little retracements either.

You may experience huge swings and you must be ready and have absolute trust in your analysis in order to remain calm during these times.