forex futures trading
Which one is better?
It depends on your personality!
Let me give you a breakdown of the three to help you choose:
Timeframe | Description | Advantages | Disadvantages | Long-term | Long-term traders will usually refer to daily and weekly charts. The weekly charts will establish the longer term perspective and assist in placing entries in the shorter term daily. Trades usually from a few weeks to many months, sometimes years. | Don’t have to watch markets intraday Fewer transactions means less paying of spreads | Large swings which require large stops Usually 1 or 2 good trades a year so patience is required Bigger account needed to ride longer term swings Frequent losing months | Short-term | Short-term traders use hourly time frames and hold trades for several hours to a week. | More opportunities for trades Less chance of losing months Less reliance on one or two trades a year to make money | Transaction costs will be higher (more spreads to pay) Overnight risk becomes a factor | Intraday | Intraday traders use minute charts such as 1-minute or 5-minute. Trades are held intraday and exited by market close. | Lots of trading opportunities Less chance of losing months No overnight risk | Transaction costs will be much higher (more spreads to pay) Mentally more difficult due to frequency of trading Profits are limited by needing to exit at the end of the day. | |
You also have to consider the amount of capital you have to trade. Shorter timeframes allows you to make better use of margin and have tighter stop losses. Larger timeframes require a bigger account so you can handle the market swings without facing a margin call.
When you finally decide on your preferred timeframe is when the fun begins. This is when you start looking at multiple timeframes to help you analyze the market.
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