LLTS64 — Trading Strategies — Shorter-Time Frame Trading

This article will shed light on shorter time frame trading and the essentials required to hit the ground running.

Traders must learn to recognize an underlying trend and trade around it to profit consistently. Trends can be divided into short-term and long-term. Contrarily, markets occur concurrently in several temporal frames. As a result, there could be conflicting trends within a single stock or cryptocurrency, depending on the time frame selected.

Understanding Shorter-Time Trading

Beginner traders ignore the more powerful underlying trend instead of concentrating on a specific time frame. In contrast, traders may be trading the primary trend while underestimating the necessity of fine-tuning their entrance in an appropriate shorter time frame. By reading on, find out which time window you should watch for the best trading outcomes.

Shorter time frame charts cover one minute to fifteen minutes. Trading on a shorter time frame can enable you to find more trading opportunities, but it is not advised for traders at the beginning or intermediate levels. Shorter time frames have more volatile price movements, making them riskier to trade.

To evaluate and modify his transactions, the trader must also ensure he is in front of the screen during market hours. Sitting in front of a computer for an entire trading day may seem ludicrous to a part-time trader.

Trading for shorter periods results in more significant losses and smaller gains. A profitable trading strategy that ensures high-probability transactions is therefore necessary. A poor trade might instantly wipe out your profits from the preceding three to four days without proper risk management! Therefore, before trading within a shorter period, be sure your trading strategy has a strong probability and risk orientation.

An event day is a trading day with essential news items like the announcement of monetary policy or quarterly earnings release. Events can change the atmosphere of the market, making them dangerous. Traders should exercise greater caution on event days, especially if they are trading on a shorter time frame. If a trade is closed out without employing sound risk management, the price movement will be highly erratic on those days.

Impulsive trading is more common in shorter time frames. Sudden price changes usually trigger your emotional response. Shorter periods may result in emotional trading decisions since there is less time for thought and planning. Trading and emotions do not mix, as we all know. Because of how quickly prices may change in shorter periods, the trader is always affected psychologically by them. A knowledgeable trader who can get over these limitations can choose to trade for shorter periods. To lessen the likelihood of financial ruin, others should refrain from trading in shorter time frames.

The Bottom-Line

A trader’s odds of success can be significantly increased by making an effort to analyze many time frames. Examining longer-term charts can help traders confirm their hypotheses, but it can also serve as a warning when various time frames diverge. By using shorter periods, traders may maximize their admissions and exits. Last but not least, combining several time frames enables traders to improve their knowledge of the trend of the asset they are trading and boost their confidence in their choices.

Disclaimer: The “Let’s Learn Together Series” by “Zignaly” is part of Zignaly’s commitment to giving back to the community. Through its directives, team Zignaly strives hard to help benefit society, helping them learn and remain on par. These articles are shared for informational and educational purposes only and do not create any directive for trade.

Please share with your friends and help them learn too! If we helped you learn, clap for us!