Forex Trading Time Frames Overview
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.
There are many advantages of day trading which include very little risk is taken upon by traders as they tend to trade small size with tight stop losses and take profit levels. Intraday trading requires intense focus as traders watch each market tick and manage their positions.
There is always risk in trading and while there are upsides to day trading there are also down sides. Cons of intraday trading include traders due to frequent trading pay a high amount of fees through spreads or broker commissions. Also small mistakes can turn into large losses if a position gets away from a trader and their account can loss a lot of money in a very short amount of time.
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.
The pros of swing trading include it tends to be easier to manage trades than day trading as well as more traders are profitable as swing traders. The spread has less of an impact than it does on intraday trading therefore traders do not waste money on broker commissions.
Among the few disadvantages of the swing time frame is that traders often enough become emotional tied to their position which causes them to hold onto losing positions longer than you should.
Position trading often known as trend trading is also known as the buy and hold method where positions can be opened anywhere from a day until several months or longer. Traders open a position on what looks to be the start of a new trend and actually add to that position as the trend develops, taking profits along the way and adding even more size on pullbacks as they resume back toward the trend.
Some traders tell of the position trading style to be the easiest and most profitable. Fitting into any active lifestyles as often traded on the daily time frame it is also the most desirable! One signal period a day makes it very easy to manage and adjust new and open trade orders.
There is always a downside and when it comes to position trading the largest con is that often traders give back big gains while trying to hold a position for even larger gains.
Once you find out what time frame is best for you it will be easier for you to settle in and get to know that time frame and then you will be able to create a trading plan based around that. The more experience you have getting to know a market the better you will be able to trade it.
