Trade in the long term requires significant expertise and tolerance for risk. A loss reflects each gain and although profitability is achievable, constant success depends on the use of effective strategies.
Qualified term traders deeply include the market and use trading strategies proven to capitalize on price fluctuations by making objective decisions based on a fundamental and technical analysis.
Advanced commercial strategies for term contracts
Under -term contracts are a versatile means of participating in various markets, basic products and currencies in interest rates and stock market indices. Several advanced trading strategies can be used to negotiate term contracts:
The withdrawal strategy
The withdrawal strategy is a popular and potentially effective negotiation strategy based on the idea that after a significant price movement in a direction, the reverse price will temporarily or “withdraw” before continuing in the original trend.
Investors using this strategy are trying to identify temporary inversions and enter into transactions in anticipation of pricing. In a long-term lower trends contract, a withdrawal strategy implies short-circuit after a temporary increase in price.
Investors that identify early trends and use a technical analysis to identify entry levels often promote withdrawal strategies for short -term trading.
Long -term trading
The propagation implies taking long and short positions in contracts in the long term related simultaneously. This allows investors to take advantage of the variation in price difference – the gap – between them.
Term trading strategies include:
- Calendar Spreads (time spread): The purchase and sale of term contracts on the same underlying asset but with different expiration dates. The objective is to take advantage of the variation in the price relationship between short -term and delayed contracts resulting from factors such as storage costs, interest rates and the dynamics of supply demand.
- Spreads Intermarket: Take positions in the term contracts of two different but linked underlying assets. The objective is to take advantage of the evolution of the price relationship between assets.
- Spreads Intervocateurs: Buy and sell contracts in the long term of different notes or locations of the same goods. For example, an investor could buy term contracts on West Texas Brut Oil and Sell Contracts Until Brent’s Brut Oil in order to capitalize on the historical price difference between the two benchmarks.
Trading in small groups
Trading in small groups consists in entering a business when the price perchs a level of support or significant resistance. The wait is that the price will continue to move to the break. For example, if gold contracts on gold have negotiated in a certain beach, then break above the higher resistance level, a trader in small groups could buy, anticipating an additional price increase.
The objective is to enter the market when the price breaks the traditional price range and enjoy the trend until it is lowered again. The key to earning money in trading in small groups is to synchronize the market well.
Range trading
The trading of the fork implies identification and trading in the specific range of an asset. Price levels act as resistance (the upper border where sales pressure tends to prevent the price from increasing) and support (the lower limit where purchase pressure tends to prevent the price from lower).
The traders of the range try to capitalize on the action of side prices by buying near the level of support, providing that the price will rebound and will sell or sell in the short term near the level of resistance, expecting the price to drop towards the level of support.
Following trend
The following trend involves identifying and negotiating in the sense of a established trend. This often uses technical analysis tools such as mobile averages and trend lines to determine trends and enter positions accordingly. For example, if crude oil prices have constantly increased, a trendy follower could buy a long -term contract, hoping that the upward trend will continue.
Advantages of long -term trading
Term trading offers various advantages to participants, from individual speculators to large commercial organizations.
Lever effect: The term contracts allow traders to control a substantial amount of an underlying asset with a relatively low margin deposit – a fraction of the value of the contract. This lever effect can directly amplify the potential profits from the negotiation of the underlying assets and allow traders with limited capital to participate in markets in which they could not have access due to high contractual values.
Blanket: Under -term contracts are powerful tools for coverage against price fluctuations. Companies that produce, process or consume raw materials can use term contracts to lock future prices, reduce uncertainty and protect beneficiary margins.
Liquidity: The term markets are characterized by strong liquidity because many buyers and sellers are ready to exchange. This allows traders to enter and leave the positions quickly.
Reduce transaction costs: Compared to certain other financial instruments, the brokerage commissions and the costs associated with the long -term trading are relatively low, certain platforms invoicing only 10 cents of the team depending on the volume.
Tax advantages: The profits of long -term negotiation can benefit from a mixed tax rate, with 60% imposed as long -term capital gains regardless of the period of detention. The remaining 40% is taxed in the form of short -term gains.
Diversification: The term markets offer access to various asset classes, including basic products, currencies, interest rates and stock market indices, allowing traders to diversify their negotiation strategies and their portfolios beyond traditional shares and obligations.
Accessibility: Electronic trading platforms make markets easily accessible to individual merchants. Various contract sizes are available to use different capital levels and risk appetites.
Disadvantages of long -term trading
Term trading also has significant drawbacks that have substantial risks for inexperienced merchants.
On the one hand, the Securities Investor Protection Corporation (SIPC) generally does not protect traders in the long term. The SIPC is a non -profit company that protects customers from its member brokerage companies. It protects customers in cash and securities from a brokerage company of members in financial HOLD. But term contracts are generally not titles, so they are not protected.
The other disadvantages of long -term trading include:
Time sensitivity: Understanding contracts have specific expiration dates. While a contract is approaching its expiration, traders must either close their position, pass it to a subsequent contract or be ready to take or deliver the underlying asset.
Risk of loss: The main advantage of the effect is also its biggest drawback. Although it increases potential benefits, it also amplifies potential losses. A small unfavorable price movement can cause substantial losses quickly exceeding the initial margin deposit.
Unexpected events: Unforeseen events such as natural disasters, political instability or sudden changes in government policies can have a significant impact on long -term prices, resulting in unexpected losses.
Temporal requirements: The term markets can move quickly and the positions must be monitored regularly. This can take time and not work for people who cannot spend enough time to follow their businesses.
Frequently asked questions
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Profitability in long -term trading depends on the strategy used, the merchant's calendar and the market conditions. When used properly, techniques such as propagation trading, escape strategies and the following trend can be profitable. However, term contracts include a high risk and no contract guarantees coherent yields.
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To reduce the risk of losing money, experienced merchants are based on research, clearly defined strategies and risk management tools such as stop orders. It is also essential to avoid overexation and monitor the monitoring positions, especially since low -prices movements can cause disproportionate losses.
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Scalping is a high frequency negotiation strategy in which traders aim to enjoy small price movements on very short deadlines – often a few seconds to a few minutes. The term scalpers generally place dozens, even hundreds of trades per day, using real-time graphics, tight stop-loss orders and rapid execution tools to capitalize on market volatility. It is better suited to experienced merchants who can devote all the attention to the markets, tolerate rapid decision -making and execute the professions precisely.
