If you bought some money when it was at $1.2 and it dropped to being worth $0.9, couldn’t you just wait until it was back up to over $1.2 again before selling it? Even if it took 2 years for it to get that high again, couldn’t you just wait? Or is there time limits?
Well let’s say you’re trading EUR/USD and you buy at 1.2000. You have no stop-loss order, so if price moves against you there’s nothing there to stop out your position. Let’s also say you have an account size of $10,000 and you trade $10/pip. Trading $10/pip means you would get a margin call if price went down to 1.1000 (a loss of 1000 pips would equal to $10k), which means your position would get stopped out and you wouldn’t just be able to sit around and wait for price to reach break-even. However, if you were trading something like $1/pip, then it is by all means possible. To get a margin call, price would have to move against you by 10,000 pips, which is highly unlikely. The reality is, it’s all about how you decide to trade on leverage. Leverage can kill your account equally fast as it can make you the richest motherpipper in your neighbourhood.
Account size, leverage and risk management will all play an important factor. Can you wait for that? Yes, it is possible but it would kill your time. Time in which you could be trading and making money.
Not only would you miss out on a lot of opportunities to make more money while waiting for a losing trade to become a winner, you could incur swap costs, and you are taking the risk that it may never go back to positive.
If you had bought gbp/usd in 2008 you would have got a rate of $2 to the £1, today you would get $1.55ish. How long might you have to wait for the price to return to its 2008 level, 6 years + so far.
Great reply, there shouldn’t be any such extensive waiting period where you just sit for years and wait for any particular position to return in green side so that you can close it in some profit.