Tuesday 17 December 2013

Time Frames

Trading is digital part of modern warfare called economy. Stepping into battlefield you are risking an injury.

From the realistic view that the whole game is manipulated, what time frame to trade to minimize the negative effect that we as retail traders are the last ones who got prices as well as data and news?

We have to trade "under or over the radar", that means work with one minute or tick charts to scalp immediate market moves or settle on dailies to fly over intraday swing moves.

Under the radar is obviously busy game with lot of opportunities and spread consuming your profits. Also one is going to shortly discover why scalping is publicly called as difficult. You really have to sit there, watch the screen and sit and watch ... . Also any slip or spread widening is going to be seen on P/L statement. But besides these disadvantages you are still under the radar and thats a good place where to trade.

Over the radar is still tricky in terms of trading data or news based on logic, because there is always serious risk that the new information is already priced in. For example I bought EURUSD once QE1 was announced with deep confidence because finally the volume was higher than expected. Well, nice top followed by long slow constant decline. Apparently the market was pricing in these new info for last few days seen on chart as steady uptrend.
But to fly above provides relative safety against intraday swings caused by scheduled data and unexpected news. Also worthy to mention: much less stress / don't need to place the order in few sec otherwise the edge fly away together with market's retrace we waited for last 90 min / fees are not issue any more / lot of free time to write a blog / your wife loves you again .. .


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