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How Long Can A Forex Trade Stay Open?

Date: Friday, January 17, 2020 10:15 AM EDT

As a general rule, there is no limit to how long you can keep a trade open.

Some brokers might put limits, but any reputable Forex brokers won’t. As long as there is a market, theoretically, you could keep your trade open forever.

Now, just because you can, it doesn’t necessarily mean it’s a good idea.

Especially for most FX traders who are in the market to make money off of changes in value in different currencies.

You don’t “cash in” until you close a trade, so at some point, you’re going to have to do that in order to make money.

Is There a Reason to Keep Trades Open for a Long Time?

Yes. Well, there was, but with interest rates around the world going to near zero, the motivation has virtually vanished for most retail FX traders.

With larger interest spreads, some traders would engage in carry trading as a form of making a profit from their account.

How this works is depending on the interest rates of the currencies being traded, you can be paid a “rollover” interest on your margin.

If the interest rate differential is big enough, and the currency is relatively stable, you can make a steady income from the trade. So, those carry FX traders would keep their positions open for extended periods of time, up to years.

Speaking Practically Today?

Unless you are into carry trading, there isn’t much practical reason to keep a trade open for really long periods of time.

You’re generally looking to get a profit from a move in the Forex market, and once that move has completed, you’re going to close the trade.

That can take different amounts of time depending on your trading style:

  • Scalpers
    Generally, scalpers are looking to get a few pips out of short moves in the markets. They trade on time frames generally below M15. Usually, they won’t hold a trade for more than an hour or two at most.
  • Day Traders
    Typically, day traders are looking at capitalizing on a technical trend. They will generally cluster around the M30-H4 time frame charts. They’ll also usually complete their trades within a day (hence the name, day trader), often within a single “session” of up to six-ish hours.
  • Swing Traders
    These FX traders are looking to ride a trend, more often it’s a fundamental move. Usually, they stick to H4-M1 time frame charts and can be in a trade for a few days to a few months. Rarely a trend will last over a year, so it’s not common, but swing traders to on occasion have year-long trades.
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