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Trading is becoming an increasingly attractive option for people wanting to earn a comfortable living from home with the freedom of having no employer to answer to.
Possibly without being aware of it - at first your trades will probably fall into the same general time frame - based on reading charts of the same time frame.
The goal of this article is to shed some light on the ease and profitability of trading over different time frames and to help you discover which is best for you.
The different price chart time frames you might choose to base your trading on range from the very short term 1 minute to 5 minute charts - medium term charts of up to about 4 hours and then longer term daily or weekly charts.
The following may surprise you regarding which time frame is easiest to trade - riskiest - most profitable and finally which is the best approach for you.
Firstly let's take a glance at short term intraday or day trading.
This is generally the most difficult approach to trading but if you're an excellent trader this can be very profitable as you're taking advantage of more of the twists and turns in the markets than a longer term approach.
Next let's look at medium term trading.
Trading over the medium term means having the ability to ride a trade you're in with a wider stop loss so you'll ignore lots of the noise of the market's smaller movements.
This is therefore less stressful for some and therefore easier and more profitable. And you'll generally be placing fewer trades than if you trade over a shorter time frame.
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What about the long term 'buy and hold' approach?...
Let's take a look...
Very long term trades like the buy and hold approach based on fundamental analysis are essentially investments.
Generally people's perceptions of this method are incorrectly that it's a easier and less risky than a shorter term approach to making money from the markets.
However - with this method if you're wrong you can lose most or all of your investment so it can be riskier than short term trading.
Afterall when trading over shorter time frames you should have tight stops.
On the other hand long term trend following is arguably the easiest and most profitable trading method..
.. But only if you're letting your winners run fully and cutting your loses quickly - in other words keeping your losses short term - all in accordance with the entry and exit rules of your system.
But what's best for you? Well this also depends on how often you want to trade and your personality.
A long term trend following approach where you place fewer trades than a short term approach may not suit you if you're keen to be quickly in and out of the market often.
To summarise - the trading time frame you choose should not only be based on your personality in terms of how often you want to trade but it should also take into account your trading ability.
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