Scalping is actively promoted today, and day trading has also been popular for several years, but amazing results are rare among those who choose this type of trading. Most of the time, beginners are engaged in precisely these areas, and very often they run out of accounts. At the same time, it is known that most professionals choose medium and long-term trading. They don’t chase dozens of little deals, they buy on quality, not quantity. Does this mean that it is better to choose long term trading and ignore the short term?
Not quite, although there is some truth to this. And that’s why.
The scalper and the day trader are not in the mood for blanket forecasts. They only care about what is happening now. They are not very interested in what has happened or is about to happen. They don’t care at all about the reasons (this is partially correct, because they make money on the noise of the market, which often has no reasons). This is especially pronounced when trading on the M1-M30 charts. In this case, even the use of a three-screen system is unlikely to provide sufficient data, because the main indicators are more extensive.
Even with all the desire, it is unlikely that a person who prefers short-term trading will be able to keep track of all market events. As a general rule, each trade generates a small increase in income. Let’s add the losing positions here. There are quite a few of them here, because the number of false signals increases along with a decrease in the time period. As a result, a trader needs to open as many trades as possible in order to receive tangible income. Therefore, he seeks to quickly analyze several markets at once. Due to this approach, it turns out that there is simply no time left for deep and thoughtful analysis. For the sake of fairness, it must be said that there are lovers of day trading and scalping who are really responsible for their work.
Long-term trades, like mid-term trades, involve rare trades that are opened for several hundred pips at a time. A trader working in this way can analyze the market once a week. And, if greed does not destroy him, then he will choose the best options, so the income will remain at a consistently high level. In this situation, the trader has enough time to analyze the selected currency pairs, understand what is happening in them in general, roughly estimate the directions and take into account technical and fundamental factors.
Also, traders who trade on the H4-W1 charts find much less market noise and, as a result, false signals coming their way.
All of the above factors negatively affect the results if a person prefers to work in small periods of time and positively if in large periods of time.
How to stay on top of events
Track Markets 2What is: Track Markets? In short, this phrase can denote the study of the factors that affect certain currency pairs. In the case of stocks, under the same rule, you would need to monitor the development of the selected company (or several companies). If we are talking about Forex, then here, for a start, you will need to know the economic situation of one country in relation to another (for this you can evaluate them separately and relate to each other).
This is not so easy for a person who previously had little interest in these issues. At first it may seem that the task has no solution, but soon it will become easier and simpler. By being interested in what is happening in the world, you will be able to assess both the long-term and short-term prospects of currencies. Just a few weeks, if you did not understand this before, and a few days, if you already understand a little in this matter, and you will begin to navigate the market more freely.
But economics and politics are only half the battle. Some people ignore it completely as they find fundamental analysis too complicated. The second point is technical analysis. It includes several different approaches, many of which are not at all similar to each other. You do not need to study absolutely everything and apply it in a complex way; this way, you are more likely to get hurt. But it is necessary to choose a variety that covers the market as a whole. For example, graphical analysis, by which you will assess the development of the selected pair over a longer term than is necessary to open a trade. If you work on H1, look at the situation on D1-W1, etc. In this way you will save yourself from sudden events that can take you by surprise.
At first glance, it may seem that this is too difficult. In the first few weeks, you can get lost in the abundance of information. But over time, it will automatically learn to distinguish necessary data from unnecessary, useful from useless. You will have your own ideas and a new vision of the market.
This approach is useful for all traders without exception. Another thing is that some understand this intuitively from the very beginning, or have already been taught to trade this way. And they have much more information, and the overall picture of the situation is much broader. Those who are not among them often simply do not understand what is happening in the market, therefore they can only analyze a small segment of the chart. If you trade this way, after a week or two of monitoring the markets and analyzing them further, you will be amazed at how much your perception has changed – everything you see on the charts will become much clearer.
And the last question that many are interested in: how many markets (currency pairs) do you need to track? It is clear that at an early stage there should be few of them, and this is important. Otherwise, you will disperse your attention and miss something. When you begin to understand 1-3 pairs, what happens to them and why, you can increase the number. Little by little, it is better to add one at a time. And the limit … you will feel it yourself. As soon as you feel like you’ve started to get lost in the abundance of information, that’s a sure sign that it’s time to stop.