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Chapter 23, Part I. Multiple Time Frame Intro. Page 6

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

    Aug 28, 2009
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    Disadvantages of long-term trading are:

    - Since you make trades relatively rarely – you need to have a lot of patience. That is 50% of long-term trading;

    - You have to put much more money into your account, since your stops will be much farther than on intraday trading;

    - Much time has to pass, before you will understand whether you have entered right or wrong;

    - If you will fail – you will fail miserably, since each trade will eat much time and money (if your stop will be triggered) – farther stops, long swings.

    Short-term trading usually includes trades that are based on the hourly time frame and higher. That is my preferred time frame. As a context you usually use the daily trend and time frame but also should know weekly and monthly support/resistance levels and overbought/oversold levels, while the trend is not so significant. Usual duration of the trade varies from few hours to a week.

    Advantages of short-term trading are:

    - Less demand for patience, more active trading and faster results;

    - More opportunities for trading;

    - Less demand for minimum account value, since swings are shorter and stops are tighter;

    - Absence of reliance on just single trade for extended time period to make money;

    - Significant amount on time to create a trading plan for a day and plan each trade;

    - Less depending on fundamental analysis;

    Disadvantages of short-term trading are:

    - most of the time you still need to sit in front of PC;

    - Higher requirements to get good quotes and market data;

    - Choosing a broker becomes a more important task to do;

    - Transaction costs becomes higher;

    - Knowledge of market mechanics are preferable;

    - Spikes, fake outs, macro data releases becomes a real danger;

    - Overnight price action becomes an additional risk.
    #1 Sive Morten, Dec 23, 2013
    Lasted edited by : Oct 1, 2016
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