Sunday, November 9, 2008

Short-Term Forex Trading

Forex traders trade over a number of different time frames, but today I'm going to discuss short-term trading and look at whether or not you can really make consistent profits trading over such a short time frame.

It's a very difficult way to make consistent profits. This is because when you screen down to the 1 and 5-minute charts, for example, you're basically just looking at noise. Sure there will be times when the price lends itself beautifully to technical analysis, but there will also be times when it's just drifting, seemingly at random.

Also, if you're constantly scalping all day you are likely to get a lot of small wins, but also a lot of times when your stop loss is hit, often immediately if trading short term charts.

Over time this can be quite stressful and not a particularly enjoyable method of trading. Yes there are traders who trade this way and make very good profits, but I myself prefer to look at 30-minutes, 1-hour, 4-hour and daily charts to find high probability trades which can play out over a few days.

After all you can often make just as many pips from one or two good longer term trades a week, than lots of smaller positions, and it's unquestionably a lot less stressful. You don't even need to be at your computer all day either because you can just set your stop loss and limit orders and just walk away.

So overall my own opinion from my trading is that short-term trading is a difficult and stressful way of trading, but that's not to say that's it can't be profitable, it most definitely can, but it's just not for me.

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