The best aspect of this Forex marketplace is the fact that it’s accessible all day long (Monday to Friday). This makes it simple for anyone around the globe to trade any timeframe they want. But I believe your success in this field is not just determined by the time frame you choose to use as well as the amount of time frames you utilize.
The reason I’m saying this is that from my experience, you’re more likely to create an effective system when you have longer time frames than shorter ones. This is because on shorter time frames, prices is often shifted randomly and whipsaw across the board. Thus, technical analysis is usually an unnecessary effort. On the other hand, on longer timeframes the price tends to conform more closely to the technical analysis since most of the noise has been removed.
I also believe that it’s an excellent idea to study multiple charts in order to increase your odds of making steady profits. This is because even when you’ve got what appears to be an effective system with only one time frame, there will be instances when you could be trading against the long period trend.
In this case, you might have a fantastic method that is able to work on the 5-minute chart. If you did receive a long signal an hour that the price was clearly in a downward direction for the fifteen minute or 1 hour charts, you’d probably be in a losing position. This signal of a suspicious trading could be prevented if you had looked at longer time frames in order to make sure you weren’t trading against the longer-term trend.
I personally prefer trading on the 4-hour chart with my main trading system I created myself. It is based on EMA crossovers. However, I will only invest in the direction that is the longer-term trend. I do this by taking a brief glance on the chart for daily and a particular indicator that is displayed on the chart to determine the direction in which the price is moving.
The point I’m trying to emphasize is that while you don’t need to use two timeframes, you can surely increase your odds of success by doing this. This is because the larger time frames will reflect what is trending, and you can utilize the shorter time frame to identify your exact entry point , and ensure that you’re always trading in line with the long-term trend, rather than against it.
A position trader, on contrary, doesn’t have to have to worry about the charts for short time frames since he’s focused on the more lengthy time frames, such as daily or weekly, monthly or annual charts. A position trader may look at the hourly charts to identify the best entries and out points but they don’t usually trade on the chart’s movements at the hourly level.
The position trader will nearly always be carrying positions for the night every day, and often for weeks as he awaits longer-term trends that will move ahead. There is one caveat: you must have ample stops as well as pockets that are fairly deep to prevent being stopped out by fluctuating prices on a daily basis. . If you are able to absorb the swings in price that occur on a regular basis and you can absorb the daily swings, this is the best method of earning from the forextime as it is the Forex tends to change well across long intervals. If your stops are set a bit far from the price action that happens daily, you’ll in a position to make profitably from this form of trading.
The way to sum it in this way: A day trader has the ability to trade on less money because they use fewer stops and is able to monitor the market all period of the day. It can be stressful and exhausting, however most traders love the adrenaline rush this type of trading offers. If you’re the type of person who is suitable for this kind of trade, you’ll likely not be content with the more sluggish rate of the trader in position.
Position trading is the best option to those who do not want the anxiety associated with day trading or those with large trading funds or both. A position trader should be able to feel at ease with any positions he’s left over night, because he is aware that the market is performing its business while he’s asleep or at work. For certain, particularly trader who are day-traders, the pressure of not having a watchful eye on positions and not protecting them for the night can be more stressful than the pressure of keeping an eye on the market throughout the day.