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Chapter 23, Part I. Multiple Time Frame Intro. Page 5

Discussion in 'Complete Trading Education- Forex Military School' started by Sive Morten, Dec 23, 2013.

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  1. Sive Morten

    Sive Morten Special Consultant to the FPA

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    Different time frames overview

    Commander in Pips: Still, let’s take some look at different time frames in general. Possibly it will help you to make some choices. Trading at each different pace has its own advantages and lacks and this is not so simple just to say – faster trading is always better. This is not the fact at all. So let’s start from Long-term trading:

    Long – term trading usually starts from daily time frames and higher – weekly, monthly or even quarterly, but most popular are daily and weekly charts. The average duration of trade could last for some weeks to months or even years sometimes. Applying long-term trading, the trader acts as follows. He or she uses 1 step higher time frame to see the trend and significant support/resistance levels, oversold/overbought analysis and the current time frame to catch some patterns to enter the trade or exit. For instance, if we trade on daily chart, we have to use weekly for trend estimation, significant support/resistance levels, while the daily time frame could be used for searching for particular patterns to enter the trade.

    Advantages of long-term trading are:

    - You do not need to sit in front of your PC the whole day every day;

    - You spend much less time on trading and analysis;

    - You do not depend much on market mechanics;

    - You have much time to make a decision and think about each trade;

    - Your trades are relatively rare, so you save more money on transaction costs, since you buy and sell much more rarely than an intraday trader;

    - Although technical analysis could be applied to any time frame trading (with significant liquidity), fundamental analysis becomes very important, even to say dominant in long-term trading.

    - IF you trade not Forex but some other asset – you can save money and do not pay for real-time quotes, since you will be fast enough even with delayed quotes for 30-40 minutes.

    - You do not depend much from intraday volatility, spikes and fake outs, especially during macro data releases. Only drastic change in fundamental perspectives could hurt your position.
     
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