Duration of a trade
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How long should I keep my position open?This is a question that many novices in the trading world are asking themselves.You should know that there is no rule, the duration of a trade depends on several factors.
The duration of your trade initially depends on your trade’s time unit. The longer the base time unit is, the longer the trade will typically be. A daily trade, for example, will be kept several days and even weeks while a 1 hour trade will only be kept for a few hours or one day.
If you use Japanese candlesticks as a graphic representation, be aware that a candlestick represents a unit of time.For your scenario to come to fruition, several candlesticks must elapse.
Whatever time unit you use in your trading, the duration of your trade depends on several elements.Whatever the duration of your trade, it is one of these 3 elements which must lead your trade closing:
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The duration of your trade also depends on your trading style. Firstly, there is a big difference between scalping and swing trading.
If you are scalping, the duration of your trades will be extremely short.This can range from a few seconds to several minutes maximum.Warning, scalping seems simple but should be left to experienced traders who know perfectly well how to manage their risks, their emotions and who are able to react quickly to price movements.
If you swing trade, then the duration of your trade is very variable and will depend on the time unit chosen.Some traders prefer day trading (i.e. cutting off all their positions at the end of the day) and will focus on smaller time units and others will let their trades carry over several days by trading on larger time units.
Your choice of trading style depends on the time you have to trade and also on your trading preferences. These together form your investor profile.
I would just give you one piece of advice: don't use leverage!For a new trader, it's an enemyIt will often only accelerate the amount of your losses.If you are new to trading, the initial goal is not to earn money but to last!If you have less than €500, it is pointless to open a Forex trading account (see: Money management with a small Forex account).
The time unit
The duration of your trade initially depends on your trade’s time unit. The longer the base time unit is, the longer the trade will typically be. A daily trade, for example, will be kept several days and even weeks while a 1 hour trade will only be kept for a few hours or one day.
If you use Japanese candlesticks as a graphic representation, be aware that a candlestick represents a unit of time.For your scenario to come to fruition, several candlesticks must elapse.
Exiting a trade
Whatever time unit you use in your trading, the duration of your trade depends on several elements.Whatever the duration of your trade, it is one of these 3 elements which must lead your trade closing:
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Your stop loss
: The further it is from your entry point, the longer the duration of your trade. But be careful not to place your stop too far, your trade must have a promising gain/risk ratio.You can consult the file: How to place your stop loss.Let me remind you that a stop loss is mandatory on each of your positions!Your objective
: The further away it is, the potentially longer the duration of your trade. You could also not have a price objective and stay in a position until the movement is exhausted.Expectations
: The duration of your trade depends on your expectations during the trade. For example, if you anticipate a major correction, you may decide to cut your trade prematurely even if the target has not been reached.These expectations are based on reading your chart with chart patterns, technical indicators and even economic announcements (see trading on economic announcements).Trading style
The duration of your trade also depends on your trading style. Firstly, there is a big difference between scalping and swing trading.
If you are scalping, the duration of your trades will be extremely short.This can range from a few seconds to several minutes maximum.Warning, scalping seems simple but should be left to experienced traders who know perfectly well how to manage their risks, their emotions and who are able to react quickly to price movements.
If you swing trade, then the duration of your trade is very variable and will depend on the time unit chosen.Some traders prefer day trading (i.e. cutting off all their positions at the end of the day) and will focus on smaller time units and others will let their trades carry over several days by trading on larger time units.
Your choice of trading style depends on the time you have to trade and also on your trading preferences. These together form your investor profile.
Specificities of Forex
Use of margin
: Each of your trades uses margin on your trading account (You can consult the page: “Required margin and margin call”, for more information).If you have a small account, the margin used can quickly be significant, which can block part of your capital (see margin required calculation tool).If you detect an interesting trading opportunity, you may not be able to trade it (especially if you have a small account).If the duration of your trades is long, you have to take this factor into account. The more leverage you use, the more margin you use.I would just give you one piece of advice: don't use leverage!For a new trader, it's an enemyIt will often only accelerate the amount of your losses.If you are new to trading, the initial goal is not to earn money but to last!If you have less than €500, it is pointless to open a Forex trading account (see: Money management with a small Forex account).
