Can you trade long consecutively as long as the price keeps going up? Forex?



Can you trade long consecutively as long as the price keeps going up? Forex?
Can you make consecutive long forex trades as long as the price keeps going up? What are the pros and cons? Is it better to trade long then short etc?

Best answer:

Answer by JoeyV
In almost any market, you can keep trading and trading until your broker tells you you don’t have enough margin in your account.

Going long and going short in FX are symmetric (unlike with stocks). Thus, if you go long pounds you are short dollars and vice versa. There are gajillions of issues but two overall principles:
a) Long very high yielding currencies gives you asymmetric returns – you will make money right up until you are busted.
b) Short very low yielding currencies is a “carry trade” and carry trades work more often than they don’t. This is because you gain economic rent from moving low-yielding currencies from places where demand for money is low to places where demand for money is high.

You should stay away from this until you can argue about the above two points for an hour on either side.

Good luck!

What do you think? Answer below!




2 Comments


  1. Stock Trading Warrior (November 20th, 2013 at 12:58 pm)

    Sure, if you’re able to read the trend you will be able to go long or short. ADX (average directional index) is a good indicator for trend. I wouldn’t go short just because a price is rising. There’s no basis for that call unless the currency/stock is at a resistance point. If something is going up and there’s no resistance point I would read the trend indicator and continue either buying more if that’s part of your strategy or stay in your current position until the trend changes.

  2. free intradaytips (November 20th, 2013 at 1:17 pm)

    The other group of investors who were forex trading for a living were not affected by these turmoils in the stock market. They traded currencies, which were not stocks of companies. Although the most important difference here is that short-selling is allowed in forex trading. Even if the price of a particular currency falls down, profit can still be made if one makes a short-sell position. That major difference, plus the fact that the forex market is more liquid than the equities market, proved advantageous to forex trader who traded for a living.


Share Your Thoughts!


XHTML: You can use these tags: <a href="" title=""> <abbr title=""> <acronym title=""> <b> <blockquote cite=""> <cite> <code> <del datetime=""> <em> <i> <q cite=""> <s> <strike> <strong>