Forex Guide

When it comes to actual trades, they fall into three categories, delineating according to an investor\’s timeframe: short term, medium term and long term. These three categories are used to sort an investor\’s various positions according to whether the investor expects to make profit from them now, a few days or even a few months.

A position consists of an order to purchase or sell one currency at a specific time combined with an order to sell or purchase another currency as soon as the first order is completed. Calculating positions involves detailed knowledge of a given currency\’s likely movement, which is in turn based on several factors: the monetary and economic policy of the currency\’s home country, geopolitical events involving the home country, etc.

Sorting positions into the three categories goes like this: if the position is meant to be completed, or closed, by the end of the day the position falls into the short term category. These positions are intraday positions, or day-trading positions. If the position is to be closed three or more days from now, it falls into the medium term category. Finally, if the position is meant to be closed at the end of significant amount of time, say three or four months it is placed in the long term category.