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In the Forex industry, there are several trading styles like position trading, day trading, swing trading, news trades, scalping, and so on. Some of them are quite popular among beginners, and some of them are preferred by professionals. Position trade is one of the most common strategies among beginners, intermediate traders as well as full-time jobholders. It is generally also known as the buy and hold trade style because the investor has to keep this trade for a longer time.
These traders don’t become too anxious about the trend, breakout, crossovers, and so on. In addition, they don’t have to use the technical tools to figure out the potential spot for entering and exiting the trade. However, it doesn’t mean that they can’t use the software. Those analyzing tools have been proved to be helpful for these guys as well. Let’s see the popular indicators that can be used in this trading strategy.
Indicators for the position traders in Forex
Since position trading is a long-term trade, it will be wise to use a few indicators to make the business even more enjoyable. Beginners can identify their potential chances to enter or buy a currency against another. Remember that fundamental analysis like analyzing news events, major political and economic issues, GDPs, inflation, interest, and unemployment rates in this long-term business approach. But using a few technical tools can be better for you to catch potential support and resistance level.
Before we start describing the software, we want to inform you that a newbie can utilize this indicator correctly on a microscopic scale because these indicators were first developed for the day traders.
- Simple moving average indicator
One can draw the moving average line using two or three day-patterns like 50-days, 100-days, or 200-days. A newbie can quickly and comfortably read this indicator because it is considered the easiest tool for Forex investors. One can conduct a historical analysis of the currency’s movement and figure out a potential buy or sell point. You can also use the Forex demo account from Rakuten Australia to mater your trading skills without risking any real money. It might take a while but it is a very safe approach.
- Moving average convergence or divergence
Convergence and divergence are two of the strongest theories in the world of trading. It will represent the basic difference between the two day-pattern of the exponential moving average. It can be of 12-days and 26-days EMA pattern. Divergence is the incident when the indicator will reveal the opposite direction of the actual market. To utilize this one correctly, a newbie should learn to use the histogram as well.
In the histogram, there will be a reference level, which is considered 0. When the bar moves above the reference level, it is an uptrend. When the bar moves below the reference level, it is a downtrend. One can observe this movement to identify the possible support and resistance level.
- Bollinger bands
This principle has been established on the basis of the first analyzing tool – simple moving average. Generally, it indicates the values of two STDEV (standard deviation) below and above the simple moving average (SMA) line. It is suggested to consider a 20-day SMA line. But the investors can adjust the data based on their choices.
In the case of position trading, this band will work best with other analyzing tools. You can correlate the market volatility by investigating the outer bands. The narrower space indicates that the market is now in consolidated condition.
These are the three major indicators for the position traders. Before entering the platform, we suggest you develop a firm strategy to become successful. They should require these elements – a preplanned entrance and exit and a controlled risk management plan. Position trading style is considered a safe one for the newbies. Therefore, while doing this business, make sure that you have adopted these elements.