5.4 Time Frame Breakdown for Different Types of Forex Traders

 

Typically, traders fall into three broad categories of time frames. Let’s take them one by one.

 

Day Traders

 

Time-frames for day traders.

These guys remain glued to their laptops all day – furiously tapping the keyboards to catch that elusive deal of the day. Their trades are ‘one-day-stands’ and closed out by the time the market ends. These traders are bound by the boundaries of time and that translates into a da

They may refer to the 1-minute, 5-minute or 15-minute charts.

(+) No overnight risk; much more opportunities and fewer losing months; requires less margin capital

(-) Very expensive due to frequent spreads to be paid; requires a lot more mental discipline and alertness; having to close trades at the end of day may mean loss of overnight profits. Though they may cut their losses short but can’t let their profits run, which is one of the basics of trading. 

 

Which type are you? At the risk of repeating ourselves, we’d advise you to take some time to figure this out and the best way is to trade a dummy account to check your performance on each kind of time frame.

  

Long-term traders

 

Time-frames for long-term traders.These traders are in for the long haul. Their trades could last from weeks to months (in the case of Mr. Buffett – ‘forever’!). Though rarely, like a stock market, they would run for years in Forex trading.

They typically refer to weekly charts for ascertaining the trend and then look to place trades at suitable points in the daily charts.

(+) Better trade planning; few trades mean less costs; no need to watch the charts through the day.

(-) Have to endure large price fluctuations; fewer trades mean that patience is needed; some months may be a complete loss; you need a larger account balance.

 

 

 

Swing traders

 

Time-frames for swing traders.

These traders are in the middle – they have a short-term perspective but not as short-term as the day traders as they are not bound by the boundaries of "a single day". Their trades could last from one to several days.

These traders may refer to hourly, 4 hourly and Daily charts to pick their entries and exits.

(+) Fewer losing months; more opportunities to catch.

(-) Since trades are held overnight risks are higher; higher costs compared to long-term traders.

 

 

 

 

 

 

 

 

 
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