Trading longer Time frames

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Posted by on Saturday August 20, 2011 15:55:2:

One mistake most newbie forex traders tend to do is trade shorter time frames. Trading longer time frames allows you to do better analysis of the market and gives you room to open or close a trade. You will find out that the longer time frame focus your work with, the longer you will be able to trade efficiently.
When I say longer time frame, I mean trading the 4hr chart and higher. If you are going to take a position, do a market analysis and hope to be effective in money management, then you should try looking at the big picture. Trading for 4hr intervals or focus in mind tends to reduce the stress and emotion most traders face than if they were trading for the short term and hoping to make quick profits. Most huge losses and really profits do happen in shorter time intervals such as 15mins to 1hr. For instance, when news events occurs, it tends to last for about 30 minutes and the effect is seen in rapidly changing prices which can either give you the best profits or knock you out to level 0. However, for someone who is looking at the big picture, trading for a longer time interval can help keep you more focused even for little work.

The article I wrote on Set and forget strategy is a form of trading that also has to do with trading longer time intervals. You could just analyse the market based in a 4hr interval and predict where it is likely to be heading. Trading for longer time frames may not bring in the highest profits but it does bring the most consistent profit and limits your losses much more effectively.

You can use a combination of shorter time frames and longer time frames but don't ever lose your focus on the long term. Questions like which currency is more likely to more stable or stronger in view of world economy are things you should ask yourself. You may trade shorter time intervals by using breakout strategies to capture a bull or bear when news reports are released but don't lose focus on trading with longer time frames. If your shorter time frame analysis coincides with that of the longer time frame, then your predictions would most probably be right.