Post by sandysmith on Jul 14, 2017 20:43:23 GMT 8
The forex market can be traded in a number of different ways. There no fixed trading strategy to trade the currency market and every trader’s goal is to make money. Most of the retail traders tend to trade the lower time frame since they get lots of trading opportunity. But as the expert traders never look for high-frequency trading opportunity rather their main focus is on quality trade execution. When you trade the lower time frame you are more prone to the false spike and trading signals. For this very reason, the expert traders at Saxo always suggest the novice traders trade the higher time frame. It’s true that if you trade the higher time frame then you will have less trading signals. But trading the higher time frame will give you quality trade setups capable of generating high profit in the market. Let’s discuss why it is so hard to trade the lower time frame.
Market noise
The forex market is always changing its movement and as a professional trader, you main goal is to predict the market movement. When you do your technical analysis in the lower time frame you are actually doing the analysis along with the market noise. For this very reason, many retail traders open orders hit the potential stop loss.In order to become a profitable trader you need to focus on higher time frame data as there as less market noise and you will be able to find key support and resistance level. Most of the time the lower time frame gives you minor support and resistance level which get breached very often and thus the traders lose money.
Reliability of the trade signals
Quality over quantity is a well-known proverb among the professional traders. The expert trader always focuses on quality trade execution and thus they use the higher time frame. Unlike the expert, the rookie traders get involved with the lower time frame and they think that the more they will trade the more money they will make. But when it comes to real life trading the less you trade the better chance you have to make money. The expert traders in the options trading industry always execute high-quality trades and ignore the lower time frame trade setup. They know very precisely that a single quality trade is capable of generating whole month’s profit. So for this very reason, they always remain focused and trade the higher time frame.
News trading
The lower time comes extremely useful for the news traders. If you look at the expert news traders then you will see that most of them use the price action confirmation signal in the 5 minute time frame to trade in favor of the news data. Unlike the new traders, they always use précised stop loss and take profit level while trading the news. They always take 2-3 % risk while trading the news release since they know that losing is just a part of the trader’s career. So if you face any loss in the market never get frustrated rather wait for the next trading opportunity and trade with proper money management. But as a news traders you should also do the higher time frame analysis to find the key support and resistance level. Some expert traders often use the multiple time frame analysis to filter the best possible trades in the lower time frame. But this is one of the most complex tasks in the forex industry and requires an extreme level of trading knowledge and experience.
Market noise
The forex market is always changing its movement and as a professional trader, you main goal is to predict the market movement. When you do your technical analysis in the lower time frame you are actually doing the analysis along with the market noise. For this very reason, many retail traders open orders hit the potential stop loss.In order to become a profitable trader you need to focus on higher time frame data as there as less market noise and you will be able to find key support and resistance level. Most of the time the lower time frame gives you minor support and resistance level which get breached very often and thus the traders lose money.
Reliability of the trade signals
Quality over quantity is a well-known proverb among the professional traders. The expert trader always focuses on quality trade execution and thus they use the higher time frame. Unlike the expert, the rookie traders get involved with the lower time frame and they think that the more they will trade the more money they will make. But when it comes to real life trading the less you trade the better chance you have to make money. The expert traders in the options trading industry always execute high-quality trades and ignore the lower time frame trade setup. They know very precisely that a single quality trade is capable of generating whole month’s profit. So for this very reason, they always remain focused and trade the higher time frame.
News trading
The lower time comes extremely useful for the news traders. If you look at the expert news traders then you will see that most of them use the price action confirmation signal in the 5 minute time frame to trade in favor of the news data. Unlike the new traders, they always use précised stop loss and take profit level while trading the news. They always take 2-3 % risk while trading the news release since they know that losing is just a part of the trader’s career. So if you face any loss in the market never get frustrated rather wait for the next trading opportunity and trade with proper money management. But as a news traders you should also do the higher time frame analysis to find the key support and resistance level. Some expert traders often use the multiple time frame analysis to filter the best possible trades in the lower time frame. But this is one of the most complex tasks in the forex industry and requires an extreme level of trading knowledge and experience.