Different Types Of Time Frames For To Trade Forex
Successful traders have said over and over again that the surest way to success is to trade a time frame that fits your personality best. There are three major time frames that can be summarized as day trading, swing trading and position trading. In order to help you decide which is best for you we will now take a look at an overview of each.
Day trading is also known as intraday trading and positions are entered and exited within the same day if not within minutes of entry. Also known as scalping trades are quick with usually smaller size and multiple trades are taken each day.
The pros of day trading or scalping include smaller risk per trade through smaller stops losses and take profits. You can make money quicker although it takes deep focus in order to day trade.
There are always downsides to everything and with day trading you can loss money extremely rapidly as well as due to the amount of trades taken intraday traders pay a high level of brokers fees through commissions or the spread. Small mistakes like not respecting the stop loss levels can turn into very steep losses in a short amount of time or even worse blow out an account.
Swing trades can last from anywhere from one day to several days or even weeks. Typically swing traders try to catch price retraces or trend reversals using indicators or price action to help tell the tale of the tape. Using swing highs and lows from recent price action traders use these points of reference for placing their entries and exits.
There are many advantages to swing trading which include that because of the higher time frames you are trading there are less possible signals during the day which makes trades easier to manage. Also the spread and commissions are less since you are taking fewer trades which helps a lot.
The downside or cons of swing trading is that traders can get emotional attached to their trades and expected outcome allowing trades to spiral out of control and turn what should had been a small loss into a large loser.
Position trading which is also known as trend trading is a buy and hold type method where positions can be open for anywhere from a few days, to a few weeks or even a few months or longer. Position traders like to get into a winning positions and build into that positions watching it grow bigger and bigger.
Position trading pros include it is the easiest method to trade and profit from as will as easiest time frame to be able to fit into an active lifestyle. Preparation can be done at your leisure and traders only require little of their time to actually place any new trades or adjust any orders.
Position traders sometimes do hold onto losing positions too long causing weeks of gains to disappear quickly. Nothing is worse for a trader mentally than to turn a big winner into a large loser and this does sometimes happen to trend position traders.
Which time frame appeals to you and your personality? Are you the type of trader who likes lots of action and the rush of trading, or maybe do you like the detachment that swing trading or position trading brings? The first thing aspiring traders need to do is figure out which time frame suits them best before developing a trading method around the time frame.
Article Source: FxTradingStock.com
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Great forex alerts can make you money but is it the best forex trading advice?
by: Christopher Agape
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Date: Mon, 12 Jul 2010
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