How long does it take for you to get paid? That is one of the questions many Forex traders ask when starting out, because it really depends on how long you hold a Forex trade and how many stops you use. The longer you hold a Forex trade, the more you have to make back in order to pay your profits.
Stop losses are a way to minimize the amount of risk you take by using these types of strategies. A stop loss is what you do if the value of the currency you are trading goes down by more than your stop limit. If you don’t use a stop loss then you could potentially lose more money than you actually make if the value goes up. A great example of a stop loss is when you try to determine if the EUR/USD will move to the right or if it will go back down.
On the long time frame, it is not possible to tell if the currency will stay the same or move down by this much. However, on the shorter time frame you can determine this for yourself and try to put a stop loss in place. If it is at a good enough price then you are going to be able to profit from the trade.
How Long Can You Hold A Forex Trade?
You should also keep in mind that in the time frame you are trading in, things can change faster than they can in the longer time frames. This means that your trades will have to be made over time, and with every time frame there is volatility involved. The more time you can hold a Forex trade, the lower the risk you take, but the larger the potential for loss increases.
There is a formula that helps you determine this, and it is known as the RSI (Relative Strength Index) formula. By knowing this you are able to put a stop loss in place, but it is not as simple as just using a stop loss percentage. You have to know when the market will break even or when it will start to decline, so you can determine how long you need to hold a Forex trade.
How long can you hold a Forex trade is an important question that many people ask. It really depends on how long you want to be on the Forex market and what type of trader you are, but it is a good idea to do a bit of homework before jumping into Forex trading.