WHY YOU ARE LOOSING AS A DAY TRADER **FOREX-STOCKS-CRYPTOCURRENCY** -

WHY YOU ARE LOOSING AS A DAY TRADER FOREX-STOCKS-CRYPTOCURRENCY

Uploaded by Mary Serrano on February 19, 2020 at 12:20 am

WHY YOU ARE LOOSING AS A DAY TRADER FOREX-STOCKS-CRYPTOCURRENCY

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To consistently make money in trading forex, stocks or cryptocurrency is to always identify the underlying trend and always trade in that direction. Remember that trading is all about probability, and while you can trade against the trend, it is not recommended unless you have a very strong confluence to do so. Because you will decrease your probability by a lot.

You might have heard many traders say, trade with the trend or don’t fight the tape and the trend is your friend.

So before we get in to the details you should write these topics down

A time frame refers to the amount of time that a trend lasts for in a market, which can be identified and used by traders.

Primary or immediate time frames are actionable right now and are of interest to day traders and high frequency trading.

Other time frames should also be in your mind so you can add additional confirms or refute a pattern. It can also be used to indicate an early change in a trend and allow for earlier more detailed entries. This is usually more advanced and should not be used my beginners.

These time frames can range from minutes, hours, days or months. A key component to always have in the back of your mind is that, most of the time, the higher the time frame used. The better the picture will be of the overall direction of the market and the overall real trend.

Trends can be said to be primary, intermediate and short term. However the markets exist in different time frames simultaneously. Because of this there can be conflicting trends within a particular stock depending on the time frame being considered. This is especially important when trading forex which moves a lot faster than stocks. It is not strange for forex traders to think that the trend is going down on the shorter time frames but miss that the overall time frames is actually pointing to an up trend and get confused. But if they learnt to read the time frames properly they would understand it better. Many new traders tend to avoid using the higher time frames because it means long periods of time to wait for a trade set up. However trading with a short term approach can be much more problematic to execute properly and it often takes traders much longer to develop the right skills to be able to pull it off.
There is also a misconception of believing that you will make more money trading the lower time frames which is not true what so ever. The only thing that is true is to make good trades. The better trades you take, the more money you will make. Long term traders will always out do short term wins from short term traders in the long run.

Now let’s talk about the pros and cons of each time frame.

Long term traders will be referred to the daily, weekly and monthly time frames. The weekly and monthly charts will establish the long term perspective and assist in placing entries using the daily time frame. Opportunities will usually form a few times a month. What is the advantage of this approach? You will not have to watch the markets intraday, meaning you will actually be able to have a decent normal life. Fewer transactions meaning less commission paid to your broker. You will also be placing much better trades in the long run.

What is the disadvantage? Large swings only appear a few times a year so patience is required. Bigger account needed to ride longer term swings. You will also need to hold losses for longer period of times without changing your decision.

Short term traders use the hourly time frames and hold trades for several hours to a week. The advantage is more opportunities for trades. Less chance of holding losses for long period of times which can be easier to handle emotionally and able to catch more opportunities. The disadvantage is that transaction costs will be higher, more overnight risk becomes a huge factor because holding trades over night for the short term is never recommended unless you are very sure it will head your way. High frequency computers has made short term trading a lot harder than it used to be.

Intraday traders use tick charts, the 15 minute and the daily to identify the long term trend. Trades are held intraday and are always closed by the time market closes for the day. This used to be very profitable a few years ago but is slowly fading away. The advantage was plenty of trading opportunities for the skilled trader. But the disadvantage is that transaction costs will be much higher. Mentally more difficult because of the need to change your bias frequently. Profits are also limited because you need to exit before the end of market close.
I would completely ignore the intraday approach to trading today because it simply is not working as good as it used to do. And this can be seen because of the high frequency computers interrupting and moving the market differently.