In the world of Forex trading, one of the most rewarding but often overlooked strategies is position trading. While many traders focus on short-term, quick trades, position trading allows you to capture long-term trends and potentially secure hundreds or even thousands of pips in profit. Although it requires patience and discipline, position trading is one of the most profitable methods for those who can stick to the strategy. In this article, we’ll discuss a simple, effective strategy for position trading and explore how IC Markets Info can help enhance your trading journey.
Step 1: Selecting the Right Currency Pairs
The first step in position trading is to choose which currency pairs to trade. This involves identifying currencies that have been gaining in value over the past few months and those that have been declining. A good period for this analysis is typically three months, and ideally, this aligns with longer-term trends over six months.
One way to do this is by using a 12-period RSI (Relative Strength Index) and examining the weekly charts of the 28 major currency pairs. By observing which currencies are consistently above or below the 50 mark across all their pairs, you can determine which currencies are trending up and which are trending down. The rule of thumb is simple: buy what’s been going up, sell what’s been going down. This may seem counterintuitive, but it’s a proven strategy.
IC Markets Info provides traders with real-time access to market data and RSI indicators, which are essential for identifying the strongest and weakest currencies. This can help you make informed decisions when selecting the right pairs to trade.
Step 2: Limit the Number of Pairs You Trade
Once you’ve selected your trending currencies, it’s important not to overextend yourself. Aim to trade only one to four pairs at a time. Spreading yourself too thin across too many pairs can dilute your focus and increase the complexity of your trading.
Step 3: Set Up Your Trading Charts
To capture long-term trends, it’s essential to track multiple timeframes. Set up charts for the following timeframes: D1 (daily), H4 (4-hour), H1 (1-hour), M30 (30-minute), M15 (15-minute), M5 (5-minute), and M1 (1-minute). Additionally, set up indicators like the 10-period RSI, the 5-period EMA (Exponential Moving Average), and the 10-period SMA (Simple Moving Average).
You’re looking to enter trades in the direction of the trend when all these indicators align across multiple timeframes. The RSI should be above 50 for long trades and below 50 for short trades. This multi-timeframe analysis helps ensure that you are trading with the trend and minimizing risks.
IC Markets Info offers comprehensive charting tools and technical analysis features, enabling traders to track trends and identify the best opportunities across multiple timeframes. Their platform provides fast and accurate data, making it easier for you to stay on top of the market.
Step 4: Determine Your Risk Per Trade
Position trading requires patience, but it’s also important to manage risk carefully. It’s generally recommended to risk no more than 1% of your total trading account on any single trade. To calculate your risk per trade, determine the average true range (ATR) for the past 20 days for the pair you’re trading. This will help you assess the appropriate stop-loss level based on recent volatility.
Step 5: Place Your Trade and Monitor
Once your setup is complete, place your trade in the direction of the trend. Set your stop-loss at a distance of 20 days’ average true range (ATR) from your entry point. Now, you must be patient and wait for the market to move in your favor. During this time, be prepared to exit if the market moves against you by a significant amount, such as 40 pips or more.
Step 6: Managing Your Trade
If the trade moves in your favor, wait for a retracement back to your entry point. If the market doesn’t retrace after several hours, it’s advisable to exit the trade manually. This prevents you from holding onto a trade that might reverse later.
Step 7: Lock in Profits and Adjust Stop-Loss
As the trade continues in your favor, move your stop-loss to break even once you’ve secured a profit that is double your initial stop-loss distance. From here, you can continue to trail your stop below support or resistance levels as the market progresses, ensuring that you lock in profits as the trend moves in your favor.
Step 8: Exit the Trade When Necessary
Eventually, the market will reach a point where the trade is no longer moving in your favor, and you’ll be stopped out. However, if you’ve followed this strategy, your successful trades should far outweigh your losing ones. Many position traders find that they can make hundreds or even thousands of pips in a single trade when the trend is strong.
Key Principles for Position Trading
Cut your losses short: Always have a predefined stop-loss and stick to it.
Let your winners run: Once a trade is in profit, allow it to develop by trailing your stop.
Never risk too much on a single trade: Risk no more than 1% of your trading capital on each position.
Trade with the trend: Position trading works best when you align with the prevailing market direction.
Don’t worry about catching the entire trend: Focus on the middle part of the trend, where the most significant profits are often made.
Conclusion: Position Trading with IC Markets Info
Position trading is one of the most effective and profitable Forex strategies when approached with discipline and patience. By following a simple, rule-based approach and leveraging tools like IC Markets Info, you can position yourself to capture long-term trends and maximize your profits.
IC Markets provides a comprehensive trading platform with real-time market data, advanced charting tools, and a suite of indicators, all of which are essential for effective position trading. With these resources at your disposal, you can confidently implement a position trading strategy and potentially see significant returns over time.
