Planning a Long-term Forex Trading Strategy

Having long-term, well-planned trading strategy is very crucial if you’re serious about staying the trading game for long.  There are many ways you can come up with a good trading strategy, but it all boils down to being able to see the bigger picture.  

And the bigger picture takes into consideration all the available information regarding the currency pairs in the  Online Forex Trading market.  

Here are the major areas you should look into when you want to look into the bigger picture and come up with a long-term forex trading strategy.

Interest Rates

Once you decide you want to make money out of the currency market, you should start being familiar with the interest rates of each country’s central banks.  You cannot ignore this if you really want to be a good, profitable HQBroker Trading Benefits forex trader.

When you hold a currency trade for more than a day, you’ll see that there’s that thing called rollover.  Depending on the currencies that you have and the direction of the trade, you might be paying a little bit of interest or earning slight interest.  

In many cases, if a country pays sufficient interests, global trader buy the currency against weaker currencies, giving birth to a trend.

Fundamentals

The interest rates, meanwhile, are just a part of a larger structure that is the commanding heights of the economy called the fundamental.

Fundamentals include things like employment, interest rates, CPI, and even politics.  While trading the big picture, you must know what fundamentals are important for the currencies involved in your trade.

Technicals

Technical analysis is tremendously helpful when put into practice and done properly.  Different traders see technical analysis very differently from one another. One may be thinking of moving averages, while another may tend to think of MACD when it comes to technical trading.

If you’re trading the bigger picture, you want to look for technical aspects that can support your trade.  If you’re planning to buy a currency pair, you don’t want it to be overbought technically. The big picture trading plan should have some technical analysis that supports your decision.  

If you see that the technical factors are on your side, you can rest assured that your risks have just been reduced.  However, as will any other forms of analysis, technical analysis can be subject to misinterpretations and biases, which can definitely hinder proper and sound investing decisions.

Weekly Chart

Sometimes when you look at the chart for the day, you might have the sense that it looks murky.  You’re not entirely sure how to interpret the data you are analyzing. You have to look at the bigger picture of the movement of the currency pair.  

And the best way to do that would be to look at everything on the weekly chart.  A view on the weekly chart could make a staggering spike on daily chart insignificant, and you might even change the way you feel about the currency’s movements.  What matters is that the weekly chart can clear things up for you.