Short term vs long term investments in Forex

Short term vs long term investments in Forex

There are many strategies and plans available for forex investments for each type of forex trading options or styles. It is a general conception about forex trading that it is quick and easy money. However, there is a huge debate in the forex trading industry regarding two major types of investments which is; whether to go for short term investments or long term investment in forex.

Just like the coin has two sides, this is a similar situation. Both short term and long term investments each have their own advantages and disadvantages. It really depends on each personality type and personal preference.

Short term investments in forex means as the name suggests, when a person buys currencies for a short amount of time such as a few hours, a day or less than a week. Then sell them when they see a good profitable opportunity and close their trade. It gives quick and immediate but small profits on a regular basis. This type of method requires good command on technical analysis and deep understanding of the market.

In contrast to that, long term investments are made when a person buys currencies for a longer duration of time such as more than a week, month or sometimes even a year. This type of investment is also referred to as positional trading or big picture trading. Investors believe that sometimes long term investments give more profit than short term’s profits combined. In order to go for long term investments, you need not only good command on technical analysis but also fundamental analysis which is harder to learn.

In comparison both the styles have their own benefits. For a short term investment method, you get quick profit and is better for those who do not plan to wait for a long time for results. Moreover, it provides more earning opportunities with lower risk of losing a huge capital. Plus, many forex trading platforms encourage short term trading and send technical signals more suitable for this method.

Long term investments can be beneficial if you want to save time and do not want to trade daily which also makes it less stressful as you do not need to monitor the charts all the time. It also provides you the opportunity to make adjustments from time to time according to news and since you do not open multiple trades a day you pay lower commission which turns out to be more profitable.

If we look at this objectively both methods suit different personalities and target objectives but if you are a beginner in the field it might be best for you to start with short term investment as they require less experience and knowledge with low capital. After a while you can surely go for long term investments as you have more experience, clearer understanding of the market and an ability to really look at the bigger picture of how the currency market works. 

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