The medium-term strategy is deservedly popular among Forex traders. And their main advantages:
1. Trading systems, which aim to analyze the daily charts, can not take into account the important news, because they either have no impact on current trends or they will be very weak.
2. By applying medium-term trading strategies, you can eliminate from your attention market noise (small fluctuations price, insignificant news), which can reduce the efficiency of trading on smaller timeframes.
3. Trade under the medium-term trade strategy allows for a significant profit even after one transaction.
4. The potential of take profit will always be less than the level of protective stop loss.
5. Availability of free time at the moment of open deals.
Features Of Medium-Term Trade Strategies
Medium-term trade strategies have the following characteristics:
1. The length of a trade transaction can be as long as 5 days (for example, a deal on a day-trading strategy can be opened for a maximum of 24 hours);
2. Profit opportunity at the best of circumstances, up to 100 points from the starting prices at several transaction;
3. The ability to use small leverage in order to reduce the risk of the transaction to a minimum;
4. The need to obtain a strong knowledge base that allows to predict the outcome of the transaction and technically analyze it.
Disadvantages Of Medium-Term Trading Strategies
Due to the fact that any Forex transactions always involve a certain share of risk, it is necessary to note the shortcomings of medium-term trading strategies, so that traders can fully assess the prospects for their use:
1. The need to use large capital for transactions (medium-term trade strategies are guaranteed to provide extremely small income from 1 transaction – only 1%);
2. Lack of control and monitoring of current events on the stock exchange. This prevents the trader from making urgent decisions on his transaction;
3. Prolongation of the transaction the next day always provides a commission for the broker.
Conclusion: Medium-term trade strategies can and should be earned. But their use requires knowledge, as traders often conducts transactions on four hourly and daily intervals, despite the fact that they are open only on the trend.