Choosing a Timeframe in Forex Trading
As you probably already realized, if you ever tried trading Forex choosing the right timeframe is very important. The general rule says that the smaller timeframe is the more time and devotion you have to put in to monitor the market well. If you are a day-trader will have to spend much more time to be in touch with price swings and daily reports thank you will also have to maintain overview over open and closed positions on a daily basis. If you are a position trader much of this activity can be skipped.
Longer Timeframe, More Risk
If we’re looking the situation from a risk point of view we have to agree that the longer the time frame used for trading is the more risk has to be assumed by the trader. It’s actually quite simple why is it that way – the market has much more time to go against your position as it has in a smaller timeframe.
Set Profit Target and Stop-Loss Always Before Opening the Position
Because of that short term trading is quite popular in the Forex market although you have to decide on your own for how long will you let certain position open. You just have to define your profit target and stop-loss position in every situation. The fact is, the shorter your timeframe is, the smaller are targets of your profit and stop-loss and vice versa at longer timeframes.
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