Can someone please answer this one for me? (how demanding )
In forex trading what would be the cost of doing the following. I.E, why don't people do it... or, do they do it?
With the EUR/USD being so damn low at the moment after taking a large tumble, buy quite a reasonable amount; say 10% of your total account and just leave it till it gets back to a more normal range.
It may continue to slide for quite some time, but it will not chew up the 90% left in your account. However, it will surely come back a loooooong way up from where you bought it. When it gets back to say 1.34 up from the 1.31 it is at the moment close your position at a large profit.
It seems to me that as long as you have enough equity in your account, for if it continues to fall, you cannot lose because it will definitely come back eventually.
Are there large costs involved in keeping a position open for a long period, or other reasons why this is not a viable strategy?
Apologies if this seems incredibly obvious, but to me it seems that as long as you size your buys/sell correctly in proportion to the rest of your account, it would be very hard to lose out in the long run if you could hold positions open for a long time without incurring penalties.