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Day Trading Profit Secrets - Know What Time Frames You Are Trading

Day Trading Profit Secrets – Know What Time Frames You Are Trading

Knowing which time frames you are trading may seem obvious. But a problem many newer traders experience is using the trading methods of one time zone into another. e.g. while trading a 3 day time frame, perhaps a swing chart. You are seeing the big picture in the weekly chart. It all looks good. The daily chart is still good but shows more volatility.

You start to feel a little nervous about the direction of your chart and you switch to a 30 minute chart. Not only do you see much more volatility but the trend may be going in the opposite direction. You panic and close the position for a small profit.

On a weekly chart the trade was right on track with normal retracements, the 30 minute looked all wrong. Switching between time frames will undermine your confidence and cause uncertainty.

If you trade a 5 minute or a 30 minute chart, looking any further out than a 4 hour chart will confuse the issue. It will look all wrong. You may feel you are about to be stopped out.

The last thing you need as a trader is to introduce anything into the equation that will cause confusion. This happens when you are not clear about your entry criteria. Do you know why you are in the trade in the first place?

Different time frames require a very different mindset. A 15 minute trade requires an agile calm mind, with clear entry, exit and stop placements. There is no place for doubt. If it doesn’t go your way, then you must wear the stop loss and look for your next trade.

A trade that is predicted to last a week to a month or more is very much the tortoise not the hare. Your stop needs to be much further from the action, in order to avoid being stopped out during retracements. You objective is a much bigger profit per trade, but this of course comes with a much bigger risk.

If you are going to chop around with time frames your focus will be lost and you are likely to make poor decisions. You can of course trade a short time frame within a longer time frame. e.g. You take 4 futures contracts in oil. Early in the trade you make some nice profits. You could close2 contracts for the short profit and let the other 2 contracts run.

You may elect to enter with another 2 contracts on a retracement. Or you may be bullish oil in the long run and are looking for profits in terms of weeks, but also take some day trades to pick up some quick profits. All you need to do is be very clear in your mind as to the objective of each trade.

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