5 Reasons Why I Prefer Long Term Forex Trading

by Stephan Smith on January 15, 2011

It’s no secret that Forex trading, also known as currency trading, can be an extremely profitable endeavorer if one has the skill and the discipline required to profit consistently. It’s kind of hard to miss the seemingly endless stories of how some individual makes a boatload of money trading currencies. I myself have profited from the foreign exchange markets, so there is no doubt in my mind that it is possible to profit.

But here’s the twist, I consistently read of currency traders that are make crazy profits from entering and holding positions for an extremely short period in the FX market. These currency traders are holding positions for less than ten minutes, five minutes, even less than one minute.

After reading about such stories, I wanted to try my luck at short term Forex trading. I knew that I had to study first before I jumped right in, so I began researching methods on how to effectively enter and hold short term positions in the currency market. After finding a couple of strategies, I proceed test them out in a demo account. I’ve must have made ten to fifteen trades in only an hour as I sat in front of the computer monitors looking at five minute charts, three minute charts, one minute charts and even the tick charts.

Up and down the prices went as I entered a trade, exited a trade, entered a trade, exited a trade. On and on I went. After finding no success, I would stop short term trading. A few weeks later I would try again. No success. A few months later I would try again. No success.

Then it hit me. Short term trading was simply not for me. Not because I wasn’t profiting for I would eventually profit if I continued to practice. Not profiting wasn’t the reason why I stop short term trading at all. Then why wasn’t short term trading for me? I realized that the whole time I was short term trading, I was stressed out. My eyes was were locked on the computer monitors as I felt the stress pile up. I also realized that I simply wasn’t enjoying myself. Yes, when I first started my attempt at entering and holding currency positions for the short term, I was excited. But after an hour, then two hours, then five hours, I noticed that I no longer was having fun. Not to mention that I had no time for myself. If I walked away from the monitors, then I was no longer in a trade. Short term trading depends on me sitting in front of a computer in order for me to make money.

Another reason why I believe that short term trading isn’t for me was due to the seemingly unpredictable volatility. It really felt like gambling. There would be a perfect setup to enter a trade. I would enter and out of no where there would be huge price move (relative to the time frame I was looking at) in the opposite direction than I thought the price would go and I would lose demo money. I know that the FX market is filled with unforeseen spikes and dips but it feels that short term currency traders are more exposed to the damaging effects of the volatility.

What really helped convince me that short term currency trading wasn’t for me was the broker fees. Most Foreign Exchange brokers charge a fee whenever you enter a trade. If you are a short term trader, then you will be constantly executing trades.That means that much of your profit will be going to the brokers and not to you, the currency trader (if you are profitable). The fees alone make short term trading unappealing. With all of these issues, I really am convinced that trading currencies in the short term isn’t for me. In fact, the opposite is my favorite. I am a long term currency trader because…

Long Term Currency Trading Is More My Style

There are five reasons why long term currency trading is more my style. The first reason is stress or rather a lack of it. Trading currencies with the long term in mind is way less stressful than trading currencies minute by minute. You basically do your research, determine your entry and exit, execute the trade and keep your position for the next couple of weeks or months. There’s no staring at charts for hours on end, trying to keep track of every price tick. Once you get in your position, you job is done for some time. You know what that means? That means less stress.

The second reason why I prefer long term currency trading over short term currency trading is due to the freedom it provides. Once again, since I am not chained to my computer when trading long term, I have time to go out to do other things. Freedom is absolutely priceless. Imagine having the free time to go out and do anything you want, while making money no less. I definitely see the value of having free time and I hope you do too. Very few people have the free time and resources necessary to go out an enjoy life. Long term trading grants that free time and if you know how to trade currencies profitably, then it can grant you the resources too.

The third reason why I prefer long term currency trading is because my experiences has shown me that it is easier to profit. When holding positions for longer time frames, I believe it is easier to profit simply because of the probabilities. Consider this example. If the value of a currency falls relative to other currencies for a week straight, there is a high probability that if you shorted the weakening currency and held that position for a the another week or two, chances are you would be profiting by some amount. With long term trading, you are truly following the trend. And when you follow the trend, you increase your chances of turning a profit from each trade. Short term trading sometimes encourages a currency trader to trade against the trend since setups in the opposite direction can occur.

The fourth reason why I prefer long term currency trading is because you are immune to much of the volatility in the markets. Currency price valuations are always bouncing up and down in the FX market. If you are short term trading, then these bounces can lose you money by hitting your stop loss. Let me ask you a question. Have you even entered a trade and an hour later you found out that you’ve been stop out because of an unfortunate fluctuation against you? I know that has happened to me on many occasions. And have you ever found out that two to three days later the price ended up in the direction you originally thought it would? If that has happened to you, then you my friend have been slapped in the face by Forex market volatility. When trading long term, the chances for being slapped by the ugly side of FX volatility declines dramatically.

The fifth reason why I prefer trading currencies with the long term in mind is because of less brokerage fees. Foreign Exchange brokers typically charge either a flat fee or other fee of some sort every time a currency trader enters a trade. The more trades that are taken, the more money a currency trader pays the brokerage company in fees. The less trades taken, the less money that is paid to the brokerage company. With long term trading, the idea is to profit as greatly as you can with as few trades as possible. In that way, you pay the brokerage companies less money while making as much money for yourself.

Here’s a recap…

The five reasons why I prefer long term currency trading:

  • Less stress
  • More free time
  • Easier to profit
  • Immune from most market fluctuations
  • Less brokerage fees

Short Term Trading VS Long Term Trading
It’s About What Works For You

Though I prefer to enter and hold positions in the foreign exchange market for the long term, that doesn’t mean that short term trading cannot be profitable. I’m sure that there are many currency traders that make huge profits by entering and holding positions for short periods of time. If you can do that, then more power to you.

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{ 3 comments… read them below or add one }

Edmund July 17, 2013 at 12:26 AM

This is spot on! I’ve traded short term for over a year now and I feel it is absolutely impossible to consistently profit from it, im excited to make steady growth using long term strategies!


paul August 6, 2012 at 3:58 PM

This article is spot on… I had a fling with day trading and found that (for me personally) it was quite psychologically damaging. I got stressed and started to hate the markets. Once I realised that I could in fact make the same kind of income or more by spending far less time watching the charts then trading became far more straight forward. Now I trade the daily charts, weekly also and trade around 3-5 setups per month. I have managed to slowly build my account with a pretty much stress free approach. This is a case where ‘Less is more’. There are so many misconceptions about trading and many do believe you have to always be in the market to make money. Im so glad I got the right education quickly that got me on the right track.


Dhananjay April 12, 2012 at 1:16 AM

This is absolutely correct. Long term trading has distinct advantages over short term. That’s why I prefer it.


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