Short Term and Long Term Trading

Short Term and Long Term Trading

Short and long term trading needs to be known for every trader. When we talk about trading, we often use long and short words to classify two types of trading .This can be confusing to understand what this term means. This time through the following review, we will discuss both. Everything related to long-term trading and short-term trading will be reviewed here.

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Forex4Live Indigo 2018

Short Term and Long Term Trading

SIMPLE EXPLANATION

The simplest way to classify long-term and short-term trading is to say that in trading, you are far from being profitable if it appears in a relative value, and near where you are going for if it falls in relative value.

For example, just say that you bought shares from company A with USD. It can now be said that you are holding company A shares and losing US dollars. This is because to be profitable, the share value of company A must be higher than the US dollar. Or another alternative, the value of the US dollar must fall against company A shares.

Forex4Live Indigo 2018

Forex4Live Indigo 2018

It should be pointed out that in a trade where you are shorter than a currency against several visible assets, you usually refer to long trading. And it is not said that you are short of cash denominations.

Another way to understand the difference between long and short trading is that if you make a trade where you want high prices on a chart, you are in a long instrument. If you want prices to fall on a chart then you are on a short instrument.

SHORT TRADING

From the Bretton Woods Agreement shortly after the end of World War II until 1971. The value of the US dollar is described as $ 35 per ounce of gold and then the price of the dollar is equal to the price of gold. The majority of major economic powers agree to improve the value of their currency in the US dollar. In 1971, the US began a series of devaluations of the dollar compared to the price of gold, before finally ignoring all links between gold and gold in 1976.

For this reason, there is very little forex trading before the 1970s. Speculative traders focus more on stocks and commodities. Traders can make money by buying stocks and commodities cheaply and selling at higher prices. However, as traders want to find a way to profit when they think that prices will fall, but do not have stocks or commodities to sell, the practice of “shortage” increases. Traders will lack stocks or commodities by borrowing stocks or commodities and selling them before buying them back in the hope of lower prices. Stocks or commodities can be returned to the borrower, and profits are taken from the difference between the original selling price and the repurchase price. It should be noted that short-term sellers must pay interest on borrowed money to buy shares or commodities for sale.

FOREX SHORT TERM AND LONG TERM TRADING

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Forex4Live Indigo 2018

In forex, things are different because whether you make trading long or short, you are as long as one currency and lacking for another. If you buy or say EUR / USD, you buy EUR with USD then you are over EUR and lack of USD. If you sell EUR / USD then you will be over USD and lack EUR . Everything is the same.

The only important factor of long or short trading questions in forex is the interest that you may have to pay to a forex broker if you hold a position overnight or alternatively receive from your broker. This is calculated by reference to interest rates where banks lend certain currencies to one another. Unfortunately forex brokers sometimes use this to make extra money from their clients.