Retail traders just starting out in the forex market are often unprepared for what lies ahead and, as such, end up undergoing the same life cycle: first they dive in head first – usually losing their first account – and then they either give up, or they take a step back and do a little more research and open a demo account to practice.
Those who do this will often eventually open another live account, and experience a little more success – breaking even or turning a profit. To help avoid the losses from hastily diving into forex trading, this article will introduce you to a framework for a medium-term forex trading system to get you started on the right foot, help you save money and ultimately become a profitable retail forex trader.
Why Medium Term?
So, why are we focusing on medium-term forex trading? Why not long-term or short-term strategies? To answer that question, let’s take a look at the following comparison table:
| Type of Trader | Definition | Good Points | Bad Points |
| Short-Term (Scalper) | A trader who looks to open and close a trade within minutes, often taking advantage of small price movements with a large amount of leverage. | Quick realisation of profits or losses due to the rapid-fire nature of this type of trading. | Large capital and/or risk requirements due to the large amount of leverage needed to profit from such small movements. |
| Medium-Term | A trader typically looking to hold positions for one or more days, often taking advantage of opportunistic technical situations. | Lowest capital requirements of the three because leverage is necessary only to boost profits. | Fewer opportunities because these types of trades are more difficult to find and execute. |
| Long-Term | A trader looking to hold positions for months or years, often basing decisions on long-term fundamental factors. | More reliable long-run profits because this depends on reliable fundamental factors. | Large capital requirements to cover volatile movements against any open position. |
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Andeerson Wong
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Master IB in Asia.
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