Why can we not invest long term in Forex? | Forex Factory

Options

Permalinks
Print Thread

Similar Threads

Why do indicators not work/work? Why is Forex not truly random? 129 replies

Why Trading Forex is So Difficult - Long Term vs. Short Term 84 replies

Short Term / Medium Term / Long Term? 3 replies

Long term or short term which one u prefer? 5 replies

Poll to see Long term vs. Short term traders 9 replies

Why can we not invest long term in Forex?

  • #1
  • First Post: Dec 27, 2011 3:25am Dec 27, 2011 3:25am
Hello,

I do not do scalping, I do not do intraday trading, Why Can I not invest on forex doing 3-4 operations and hold them for 2-3 months? ....

Surelly I could BUT there is the swap that wil erase all the gain. If my goal is to earn 200 pips(with all the trades) in 2 months I can't trade in this manner it for the swap!

I know there is swap-free account (for religious reason), but obviously it is not for all. I also know there is positive swap, but it depends on the position.

What can you advice me? trade on futures? trade on ETF (like FXE)?

Thanks!
  • #2
  • Dec 27, 2011 3:51am Dec 27, 2011 3:51am
If you feel comfortable in ETF then you should move for it.
  • #3
  • Dec 27, 2011 3:52am Dec 27, 2011 3:52am
Quoting henryduncan1
If you feel comfortable in ETF then you should move for it.
do they not have "swap"?
  • #4
  • Dec 27, 2011 2:17pm Dec 27, 2011 2:17pm
The swap isn't always negative, though it is a source for brokers' profits, and therefore tilted towards the negative side. Why not trade the pairs in the direction so that you get a positive swap?

see http://alpari-forex.com/en/swaps_history/
The nail that sticks out gets hammered back in
  • #5
  • Dec 27, 2011 5:51pm Dec 27, 2011 5:51pm
I hold positions for several months, and the swap is little more than a blip on the bottom line. Sometimes it is positive, sometimes negative, it tends to even out over time (though it is slightly tilted to the negative like Noloqy says). As long as the pair is trending, as it should be when you hold a position open for that long, don't worry too much about the swap.
si hoc legere scis nimium eruditionis habes
  • #6
  • Dec 27, 2011 6:48pm Dec 27, 2011 6:48pm
Quoting dptrader
Hello,

I do not do scalping, I do not do intraday trading, Why Can I not invest on forex doing 3-4 operations and hold them for 2-3 months? ....

Surelly I could BUT there is the swap that wil erase all the gain. If my goal is to earn 200 pips(with all the trades) in 2 months I can't trade in this manner it for the swap!

I know there is swap-free account (for religious reason), but obviously it is not for all. I also know there is positive swap, but it depends on the position.

What can you advice me? trade on futures? trade on ETF (like...
books on technical analysis are the key. a very good one is "technical analysis for stock trends" by john magee. Dont let the name fool you, as TA works in most freely traded active markets with charts to review.

there are many others but this, I think, is the most comprehensive and easily understood.


trend trading is possible in these markets just as any other markets. if you check the charts you see trends run for 1000's of points.

the trick is to know when to get in and when to get out, emotional control, and patience. its a long road but very satisfying.

if you got it right the swaps will not matter much if at all.

just another cost of doing business.
  • #7
  • Dec 27, 2011 11:21pm Dec 27, 2011 11:21pm
i have a separate personal account that i trade on a weekly and daily TF. I hold these positions for weeks/months and use up to 300 pip stops( obviously use >3:1 RR)
  • #8
  • Dec 28, 2011 12:20am Dec 28, 2011 12:20am
When you're a position trader, swap fees is miniscule when your trades gain 1000 pips or more even in 2-3 months of holding the trade.
Fear prevent possibilities, and so does Greed
  • #9
  • Dec 28, 2011 12:22am Dec 28, 2011 12:22am
Quoting mfoste1
i have a separate personal account that i trade on a weekly and daily TF. I hold these positions for weeks/months and use up to 300 pip stops( obviously use >3:1 RR)
Hi mfost

Would you open a thread to share your trading method?
I am very keen to pick up long term trading method like yours e.g. hold for weeks.
Also I don't mind with 300-500 pips stop loss.

Cheers
  • #10
  • Dec 28, 2011 2:53am Dec 28, 2011 2:53am
I've been able to successfully invest in Forex long term. Recently stopped doing it on most pairs bc of CB interventions & volatility makes the best investment vehicles turn to shit.

I suggest moving stop placement from breakeven(or whereever) to breakeven + cost of swaps. Pip gains will overshadow swap losses.
  • #11
  • Dec 28, 2011 3:10am Dec 28, 2011 3:10am
Sounds like someone hasn't heard about IRD (interest rate differential), the carry trade, or high yielding and funding currencies!

  • #12
  • Dec 28, 2011 3:22am Dec 28, 2011 3:22am
Quoting pipmutt
Sounds like someone hasn't heard about IRD (interest rate differential), the carry trade, or high yielding and funding currencies!
Theoretically, the carry trade doesn't exist. Based on interest rate parity, the expected spot rate at future point in time equals the price of a futures contract with that maturity. Given arbitrage properties, the futures price is then determined by the interest rate differential.

If we then take into account that retail brokers skew this interest rate differential to the negative, the carry trade has a negative expectancy.

Fortunately for us, interest rate parity doesn't provide an unbiased predictor for the future spot rate, meaning that a profitable "carry trade" potentially exists. However, this doesn't naturally imply we should buy the high-yielding currency and sell the low-yielding currency.
The nail that sticks out gets hammered back in
  • #13
  • Dec 28, 2011 3:32am Dec 28, 2011 3:32am
Quoting Noloqy
.....However, this doesn't naturally imply we should buy the high-yielding currency and sell the low-yielding currency.
Hi Noloqy

When risk is on it's an ideal nearly no-brainer positional trade, capital appreciation and interest on a leveraged position, what more could anyone ask for!

The problem comes when risk is off and positions are covered, it can be quite spectacular (and potentially devastating!) as you've probably seen yourself.
  • #14
  • Dec 28, 2011 6:20pm Dec 28, 2011 6:20pm
Quoting sniperfxmy
Hi mfost

Would you open a thread to share your trading method?
I am very keen to pick up long term trading method like yours e.g. hold for weeks.
Also I don't mind with 300-500 pips stop loss.

Cheers

its quite simple really.....I use bollinger bands, moving avgs, and macd. Its primarily momentum based, enter position when momentum/PA changes. I will start a long term trade with very small positions in relation to acct size so I can handle a 3 or 400 pip drawdown if necessary.
  • #15
  • Dec 28, 2011 7:36pm Dec 28, 2011 7:36pm
There is a giant tread on ff by grame who holds his trades forever
building an equidy millipede or something ..anyway search for it
  • #16
  • Dec 28, 2011 11:17pm Dec 28, 2011 11:17pm
I agree that the longer term trading is the way to make serious money as your average trade leaves plenty of profit once the spread, slippage etc are taken into account. I think the best way is either to trade the futures market (you'll need a bigger account although you will anyway to tolerate the noise on the longer timeframe), or if the interest differential is right do it with a reputable forex broker where you'll earn swap each day (carry trade).
  • #17
  • Dec 29, 2011 5:52am Dec 29, 2011 5:52am
Quoting dptrader
Hello,

I do not do scalping, I do not do intraday trading, Why Can I not invest on forex doing 3-4 operations and hold them for 2-3 months? ....

Surelly I could BUT there is the swap that wil erase all the gain. If my goal is to earn 200 pips(with all the trades) in 2 months I can't trade in this manner it for the swap!

I know there is swap-free account (for religious reason), but obviously it is not for all. I also know there is positive swap, but it depends on the position.

What can you advice me? trade on futures? trade on ETF (like FXE)?

Thanks!...

The swap issue is something you cannot avoid. When you think about opening a position for months you need to find out if is a negative or positive swap. If it is negative, you might try a different pair that contains the currency you believe in. ETF and future have their own commission so I do not think that it would be a better alternative.
  • #18
  • Feb 8, 2012 7:38am Feb 8, 2012 7:38am
My believe is

1. forex market often run in short cycle, and extremely volatile, and direction is swapped extremely fast, and news driving, ...etc.

2 days cycle, 1 week cycle, 2 week cycle often happen.

2. high leverage is used. If you don't take profit when +, if turn around, then, you would get huge loss -.

3. market often do a huge pullback when lack of continue order or when market makers(dealers) want to recover their stock due to they are hedged out their selling contracts(they are ponzi).

So, forex is not good for long-term investor to buy-hold for 2 month. It is good for short, fast gunman to short at short cycle's low and grape pips at cycle's high. Then, repeatly doing at next cycle.

You can make money in 2-5 days, easy!!! why would you want to wait for more days to make same money, silly? See n-usd daily, drop down, now, bounce up. In nov, it drop, jump; in Dec drop, jump; in jan, jump in zigzag of 3 days or 5 days; in feb, jump ?
  • #19
  • Last Post: Mar 17, 2014 8:49pm Mar 17, 2014 8:49pm
I do not see a problem investing long term in forex. Just trade the weekly/monthly time frame. It's obvious to see a trend change on those time frames.
0 traders viewing now