Choosing a time frame to trade on depends a lot on your personality. An adrenaline hungry trader will likely seek shorter time frames and more action, while a calm-seeking trader will prefer longer time frames and sitting on a position for a longer period of time.
Why do many traders fail at forex trading? Very often we find that common trading strategies have limitations that few understand. Here you have a list of forex educational articles attempts to explain why some of the most popular currency trading techniques fail and, more importantly, how we might fix them.
Even if you like the fast action, there are still 3 significant advantages in trading the longer time frames.
1. Avoiding over-trading: Trading on shorter time frames means entering and exiting trades relatively quickly. So, you can squeeze in more trades in a short period of time. Highly disciplined short-term traders manage to put themselves in an isolated room, trade for a pre-defined period of time and then leave it altogether. For others, it doesn’t work that way: quick success raises the appetite for more trades and over trading. Failure to make profits in this limited time often calls for “revenge” (which is quite disastrous) and this can lead to more trades as well.
2. No noise: When trading short time frames, you are much more dependent on momentary flow action in the markets. Such sporadic moves can undermine your analysis quite easily. Any exporter or importer placing a large enough order in the market according to his needs can rock the whole boat. On higher time frames, this kind of action isn’t felt.
3. No need to look at higher time frames: When trading lower time frames, you need to see the bigger picture as well, and may require looking at one or more higher time frames. This complicates the analysis and the trade.
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Editors’ Picks
EUR/USD now refocuses on the 200-day SMA
EUR/USD extended its positive momentum and rose above the 1.0700 yardstick, driven by the intense PMI-led retracement in the US Dollar as well as a prevailing risk-friendly environment in the FX universe.
GBP/USD extends recovery beyond 1.2400 on broad USD weakness
GBP/USD gathered bullish momentum and extended its daily rebound toward 1.2450 in the second half of the day. The US Dollar came under heavy selling pressure after weaker-than-forecast PMI data and fueled the pair's rally.
USD/JPY marks up a 34-year high as USD returns to favor
USD/JPY rises to another multi-decade high amidst enthusiasm for the US Dollar. US economic exceptionalism and a massive US Treasury bond sale are fueling USD buying. Japanese Finmin verbal intervention warning is ignored by USD/JPY.
Editors’ Picks
AUD/USD could extend the recovery to 0.6500 and above
The enhanced risk appetite and the weakening of the Greenback enabled AUD/USD to build on the promising start to the week and trade closer to the key barrier at 0.6500 the figure ahead of key inflation figures in Australia.
EUR/USD now refocuses on the 200-day SMA
EUR/USD extended its positive momentum and rose above the 1.0700 yardstick, driven by the intense PMI-led retracement in the US Dollar as well as a prevailing risk-friendly environment in the FX universe.
Gold struggles around $2,325 despite broad US Dollar’s weakness
Gold reversed its direction and rose to the $2,320 area, erasing a large portion of its daily losses in the process. The benchmark 10-year US Treasury bond yield stays in the red below 4.6% following the weak US PMI data and supports XAU/USD.
Bitcoin price makes run for previous cycle highs as Morgan Stanley pushes BTC ETF exposure
Bitcoin (BTC) price strength continues to grow, three days after the fourth halving. Optimism continues to abound in the market as Bitcoiners envision a reclamation of previous cycle highs.
US versus the Eurozone: Inflation divergence causes monetary desynchronization
Historically there is a very close correlation between changes in US Treasury yields and German Bund yields. This is relevant at the current juncture, considering that the recent hawkish twist in the tone of the Federal Reserve might continue to push US long-term interest rates higher and put upward pressure on bond yields in the Eurozone.
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