Daily or Position Trader, their strengths and weaknesses

Day-trading, which was once the exclusive domain of the floor trader, is now fair game for all speculators. Inspired in part by large intraday price swings, instant availability of quotes, affordable high powered computers and competitive commissions, the new wave of day-trading methods and systems has attracted thousands of traders in recent years. The undeniable thrill of trading within the time span of one day is, however, a double-edged sword: one that can hurt as well as heal. To be successful, a day-trader must have the discipline of a machine, the instincts of a fox, the emotions of a rock, the skills of a surgeon and the patience of a saint. (And a little luck wouldn’t hurt either.) The day trader works more with the emotions along with the fundamental analysis.

Definition
Very active currency trader who holds positions for a very short time and makes several trades each day. Day traders are individuals who are trying to make a career out of buying and selling stocks very quickly, often making dozens of trades in a single day and generally closing all positions at the end of each day. Day trading can be costly, since the commissions and the bid/ask spread add up when there are so many transactions.

Position Trader looks for occasional significant moves that may unfold quickly or over time. It patiently waits for ideal trade setups to occur during minor and major trend reversals in certain sectors, indexes or entire broad markets. Determination of these potential setups is derived from technical indicators, chart patterns, point and figure charts and fundamental news events. Once a move shows sign of development, hourly and intraday charts are monitored for optimum entry.

Definition
Currency trader who, unlike most traders, takes a long-term, buy and hold approach. In currency trading, «long-term» refers to holding until the delivery date is close, usually 5-7 months.
Basically, a position trade approach is to enter the markets only during times of key reversal probability in order to capture large moves as they gradually or quickly unfold. It is designed for traders who favor a gradual, buy and hold approach when ideal trade conditions exist for high-odds success.

Important dates in the Forex History

Early 20th Century
Only in the 20th century paper money start regular circulation. This happened by force of legislation, the efforts of central banks to manage money supplies, and government control of gold supplies.
Within a country, this fiat money is as good as any other form. Internationally, it is not. International trade has always demanded a money standard accepted everywhere.
Gold and silver provided such a standard for centuries. An official Gold Standard regulated the value of money for about a century, prior to the start of World War I in 1914.

1929
The dollar has been perceived as more of a has-been, due to the Stock Market Crash and the subsequent Great Depression.

1930
The Bank for International Settlements (BIS) was established in Basel, Switzerland. Its goals were to oversee the financial efforts of the newly independent countries, along with providing monetary relief to countries with temporary balance of payments difficulties.

1931
The Great Depression, combined with the suspension of Gold Standard, created a serious diminution in foreign exchange dealings.
World War II
Before World War II, currencies around the world were quoted against the British Pound. World War II crashed the Pound. The only country unscarred by the war was the US. The US dollar became the prominent currency of the entire world.

1944
The United National Monetary and Financial Conference at Bretton Woods, New Hampshire discussed the financial future of the post-war world. The major Western Industrialized nations agreed to a «pegging» of the US Dollar, which in turn was pegged at $35.00 to the troy ounce of gold. The future was designed to be stable, in part due to the tight governmental controls on currency values. The US dollar became the world’s reserve currency.

1957
The European Economic Community was established.
© 1st Forex Trading Academy 2004 9
Introduction

1967
At the IMF meeting in Rio de Janeiro, the Special Drawing Rights (SDRs) were created. SDRs are international reserve assets created and allocated by the IMF to supplement the existing reserve assets.

1971
The Smithsonian Agreement, reached in Washington, D.C., had a transitional role to the free floating markets. The ranges of currencies fluctuations relative to the US dollar were increased from 1 percent to 4.5 percent band. The range of currencies fluctuating against each other was increased up to 9 percent. As a parallel, the European Economic Community tried to move away from the US dollar block toward the Deutsche Mark block, by designing its own European Monetary System.
In the summer of 1971, President Nixon took the United States off the gold standard, and floating exchange rates began to materialize.

1972
West Germany, France, Italy, the Netherlands, Belgium and Luxembourg developed the European Joint Float. Member currencies were allowed to fluctuate within 2.25 percent band (the snake), against each other and 4.5 percent band (the tunnel) against the USD.

1973
The Smithsonian Institution Agreement and the European Joint Float systems collapsed under heavy market pressures. Following the second major devaluation in the US dollar, the fixed-rate mechanism was totally discarded by the US Government and replaced by The Floating Rate.

1978
The International Monetary Fund officially mandated free currency floating.

1979
The European Monetary System was established.

1999
January 1st, 1999, the Euro makes its official appearance within the countries members of the European Union.

2002
January 1st, 2002, the Euro becomes the only currency and replaces all other twelve national currencies within the European Union and Monetary Market: Belgium, Germany, Greece, Spain, France, Ireland, Italy, Luxembourg, Netherlands, Austria, Portugal and Finland.

Successful traders

Successful investors may use different systems or approaches to the market, have different educational backgrounds and be of various ages. However, they would have the following beliefs that enable them to reap profits from the markets:1. Self-confidence. This comes from both knowledge of the markets and self-knowledge of their strengths and weaknesses. They effectively believe that they will make profits in advance. They believe the game has been won before they begin. If you are not self-confident in your own ability, it is unlikely you will ever become a successful trader.2. Money itself is not important; this allows them to emotionally detach themselves from trading.3. Losing money can and will occur, and is acceptable to these investors.4. Profits will occur over a period of time and these can be run to a significantly larger size than their losing trades.5. These investors love and enjoy what they are doing, and therefore have no problem devoting regular time to trading.6. Open-mindedness and adaptability. Successful traders remain open-minded and receptive to new ideas when it is necessary. They find it easy to adapt and change and they are not concerned with admitting when they are wrong.A well thought out and logical trading method, combines with the above beliefs, will give any trader an edge in the quest for profits.