Wednesday, December 31, 2008

Long-term macroeconomic trading

Long-term trading in currencies is generally reserved for hedge funds and other institutional types with deep pockets.

Long-term trading in currencies can involve holding positions for weeks, months, and potentially years at a time. Holding positions for that long necessarily involves being exposed to significant short-term volatility that can quickly overwhelm margin trading accounts.
With proper risk management, individual margin traders can seek to capture longer-term trends. The key is to hold a small enough position relative to your margin balance that you can withstand volatility of as much as 5 percent or more.


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