How Long Can You Hold A Trade


Introduction

How long can you hold a trade? In OctaFX, this depends on several factors. Let's take a look at some of these factors and see how long each transaction can last.

OctaFX is one of the probably most popular brokers on the market and that's due to its great trading conditions. If you have been trading with OctaFX before and read some of the accounts about this broker, you may also wonder about how long you can keep a trade.

What does this mean? Should you keep your position for a long time or should you switch it just in a short period of time? This is something that many traders struggle with when they start.

How Long Can You Hold A Trade?

The answer depends on your time horizon, but in general, the longer the time horizon, the higher the probability that you’ll be able to hold a position for a long period of time.

For example, if you have less than a month to sell your stock, then it’s unlikely that you will be able to hold a trade for more than a few days. If you have 12 months or more to sell your stock, however, then there is much more leeway in terms of holding times.

Let’s look at an example of how this plays out:

If you are looking at buying 100 shares of XYZ stock and plan on selling them in five years, then holding this position for less than five years is not ideal. This is because if the market moves against you during those five years and drags down your price below what was paid for your shares (and all else being equal), then it may take quite some time before they can be liquidated at a profit — which could mean losing money unnecessarily.

Difference between shorted and longed trades

Shorting is when you go long on the assumption that there will be a decline in price in the future. You might be right, but there's no guarantee that the price will decline. You can also go short because other people are shorting or because you want to buy a stock in another sector at a lower price than you think it should be trading at.

Longing is when you buy a stock or ETF on the assumption that it will rise in value over time. It's possible that your prediction isn't correct, but there is no guarantee that it won't happen either (otherwise everyone would just sit on their hands).

If you're considering either type of trade, think carefully about your investment strategy and the risks involved before jumping into the market with both feet!

Combine the two profit sources in your trading plan

The best way to combine the two profit sources in your trading plan is by using a stop-loss order. That way, if one of the two profit sources suddenly drops off, you can simply cancel the other and move on without losing a lot of money.

The downside to this strategy is that it requires more discipline and planning than just buying options and waiting for them to expire. On the other hand, it gives you more flexibility when managing your risk profile.

For example, if you're trading a stock that has a large day-to-day swing high and low, then you'll want to look for stocks with a similar range. If you can find stocks that trade within that range, then you'll have the potential for more profits.

The same goes if you're trading futures contracts (like gold or oil) with a high volatility day-to-day swing. You want to find stocks with similar volatility levels and whether they trade on an intraday basis or not.

Reverse the trading process, from exit to entry

You can use a stop loss order to protect yourself from losing money. The stop loss is your last-ditch effort to protect against an adverse outcome.

A stop loss order is an order that triggers once a predetermined number of shares have been bought or sold at a given price. For example, if you bought 100 shares at $10 per share and your stop loss was set at $10.50, then when the stock hits $11 you'll be notified that more than 100 shares have been bought or sold at the specified price. Your order will then trigger and sell all remaining shares in your portfolio (up to the maximum allowed by your broker).

Become a better trader today!

If you are a beginner trader, you may be wondering how long can you hold a trade. This is a common question and it's very important to understand that the answer depends on a few factors.

First, how much money can you afford to lose? If you have a small account, then the answer is probably "a few days".

However, if you have an account with $100k in it and $300k in total assets (stocks & cash), then the answer will be "a few weeks".

Second, what is your risk tolerance? For example, if you're willing to risk $10K per week on average, then it may only take 2-3 weeks for your trade to work out. However, if your tolerance is higher (say $20K per week), it could take longer.

Third, how much time have you got to wait for results? We are talking about the time between when you enter a trade and when you get out of it. If it takes 3 weeks for your trade to go both ways and 5 weeks overall to see results then there is no need to rush into any decisions.