Know Your Time Frame

There is a direct correlation between correct position size and higher profitability. Loses are inevitable; but smaller positions produce smaller losses, allowing quicker recovery and less emotional attachment. Large positions go hand in hand with large emotions: The bigger the position, the more intense the feeling of either greed or fear.

It is not uncommon for traders to enter into a positions not knowing beforehand how much they are willing to lose, because they think they are going to win. One way to avoid adding to a loser is to realize that you can cut your losses now and get back in later.

Here is a display of the 4 time frames, which over few years traders have used or are currently using in there daily trading plan. A 1, 5, 60 minutes and Weekly charts. Technology has made identifying trends easier than ever. The trend is the true force behind price action and sector momentum. The “meat of the move” as many call it, is the middle of the trade you should focus on catching and trading.

Trends come in many shapes and size. Short-term traders should have different trend definitions from long-term traders. As a short-term trader, your holding period will be from 2 minutes to 3 or more days. Three days is usually sufficient to time for a short-term trend to play out. Look at the example below for news on $GS.

$GS expected to settle forex suit for almost US$130 million



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