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Long Term Trading Systems Description |
Long term trading systems are rather risky
and only experienced participants of the market can avoid all hidden
dangers. We can describe long term trading systems by means of
financial markets (e.g. Forex).
Long term play at the financial markets is present when the participant
of the market (trader) keeps a position (for sale or for purchase) for
a long period of time. It can be several weeks or even several months.
It is
understandable that only rather serious players with serious
financial resources can afford to use long term trading systems. Why
can't small traders use this type of trading
systems? The answer is obvious: day rate fluctuations will
simply "eat" all the resources of small traders.
One of the trading
system tools
that is widely used in long term trading systems is fundamental
analysis (don't confuse with technical analysis). Fundamental analysis
is forecast of the market condition on the basis of current situation
in the world (current news and not only in the financial sphere). For
example, there is news about great destructions in the United States of
America because of some natural disaster. It leads to slump of dollar
against Euro etc. On the contrary, small traders (in short term trading
systems) use technical analysis (mathematical methods of
forecast of rate fluctuations during one day or week).
Fundamental reasons have a long period of influence. To formalize (make
a mathematical tool of analysis of fundamental reasons and forecast of
consequences) is very difficult; it is next to impossible. That is why,
the parameters and the rules that are important in long term trading
systems are experience of the trader, his/her knowledge, and skills to
forecast and see the connections among, as it were, minor news about
rates of exchange or value of stocks etc.
It is also should be mentioned that serious (big) traders form the
market itself, because the sums that are usually are in long term
trading systems, are rather significant values on the market (though it
is not the rule of thumb).
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