How long is the trade when people say short-term or long-term?

Beginner Questions
1

i’ve been trading for only 2 weeks now, and i was curious about people talking about short/long term trades.

i know it varies a lot… but like, let’s just say i’m analyzing a pair with an 1hr chart, and a day chart with another pair.

i’m just not sure how far i have to look out. i spent much time scalping…usually with 15min charts. and i kinda noticed it’s better for me to have some good setups for specific terms, not having to look at the prices moving many times.

please help me with some basic ideas
and i’m sorry that my english is not that good.

2

Like u said it really depends, 1H-4H are usually considered what i call medium term, these trades on average are good for 40-50 Pips and are good day trades that last a few hours to a few days.

anything lower and your scalping for 10-30 Pips, and is what I call short term usually a couple of hours.

Long term can be a few days to a few weeks,a few months even or years.

Its all relative. but people that go on the daily or weekly time frames tend to target between 100-300 Pips or more

3

15-minute charts and 30-pip targets have [I]nothing[/I] to do with “scalping”, guys! :wink:

Scalpers usually trade in large size (many lots) and go into a trade for [B][U]seconds[/U][/B] or maybe even a minute, aiming to snatch [B][U]a pip or two[/U][/B], with a [I][U]very[/U][/I] tight stop-loss, and typically have a very high win-rate. It’s a whole different world of trading, really. Some institutional traders do it. Some independent (“retail-ish”) traders do it, too - the ones I know who do it successfully are ex-institutional traders, the people who have saved up their annual bonus payments to use as trading capital for their own accounts, and “gone private/independent”. This is done by using fast tick-charts, not 15-minute charts or 10-30 tick targets!

4

Hi Seih,

People disagree on the exact cutoffs for what defines short-term, medium-term and long-term trading.

My personal definitions are as follows, because I see the approaches of these 3 time frames as most different from each other:

[B]Short-term trading[/B]: Getting in and out of trades within one day. The goal is not to have any positions left open at the end of today’s session of trading. Generally speaking, due to the short time frame, short term traders rely more on price action and technical analysis rather than fundamental analysis.

[B]Medium-term trading[/B]: Having trades that last anywhere from 2 days to a month. (Again this is my personal definition on time frames.) Generally speaking, traders on this time frame tend to rely on both technical and fundamental analysis. This is the time frame I trade. My personal trades average between 2 days and 2 weeks in duration.

[B]Long-term trading[/B]: Trades that last over a month. Generally speaking, traders on this time frame rely more on fundamental analysis but can use technicals to determine entry and exit levels.

In my experience, new traders are too quick to dismiss a long-term approach, because they equate longer-term trading with bigger losses. While it’s generally true you have to risk more pips on a long-term trade, that doesn’t necessarily mean risking more dollars.

Consider that when you trade one micro lot (1000 units of base currency) you are risking only 10 cents per pip. That means you could risk 500 pips, and that would equate to $50.

Furthermore, if you have limited time to devote to trading per day, then it’s worth noting that long term trading tends to require less screen time than short term trading. That’s because long term traders tend to rely more on pending orders (entry orders, stops and limits) to enter and exit their trades than short term traders do.

Below is an excerpt from an article by currency analyst James Stanley on What is the ’Best’ Time Frame to Trade?
[B][I]"All new traders should begin with a long-term approach; only getting shorter-term as they see success with a longer-term strategy. This way, as the margin of error increases with shorter-term charts and more volatile information, the trader can dynamically make adjustments to risk and trade management.

Traders utilizing a longer-term approach can look to use the weekly chart to grade trends, and the daily chart to enter into positions."[/I][/B]

Welcome to BabyPips!

PS: Your English is excellent. I’m curious though, what is your first language?

5

[QUOTE=lexys;779469]15

Hi lexys ( just how many avatars do you have) +1 on what you said.

The term “scalping” has been incorrectly morphed by the Forex community to mean day trading, the original term applied to market makers whom profited on the difference between the bid and ask price, not something most retail traders can do.

My advise too newbies is to forget scalping or day trading, and go with swing trading using 4hr and daily charts

6

Wholeheartedly agree, scalping is far too fast and pressured for new traders.

7

Intraday trading means short term trading, scalping is the most popular trading style of short term trading! Besides, pro traders are mainly make dealing with long term trading! To do long time trading, traders need clear knowledge on the market! Surely, long term trading is much profitable and standard way of Forex trading!

8

Scalping requires fast reflexes and quite a bit of experience, I too wouldn’t advise inexperienced traders to focus on it.

9

Scalping is trading for some seconds to a few minutes. Day trading is when you close your trade before the closing of a daily candle. Any position over-night comes under long term trading.

10

It probably won’t surprise you that different traders offer different answers to your question about short-term and long-term trades. In fact, [I]ten[/I] different traders would likely give you [I]ten[/I] different answers. Which illustrates the point that defining these things is a matter of preference, opinion and semantics.

So, with nods to both Lexy and Jason, I offer my own classification of trading styles, from the shortest time frame to the longest.

• A scalp (or scalping trade) is a trade in which the entry and exit are expected to occur seconds or minutes apart, and the profit target is 30 pips or less. True scalping trades are normally too fast to lend themselves to multi-time-frame analysis. Often, a true scalper is focused on one chart only — either a 5-minute or 1-minute chart. Some scalpers work entirely off tick-charts.

• A day-trade (or intraday trade) is a trade in which the entry and exit are expected to occur within the same trading day, and the profit target is 30-100 pips. Appropriate charts might be the 4-hour, 1-hour and 5-minute charts, as [I]The Three Ducks[/I] thread recommends.

• A short-term trade is a trade in which the entry and exit are expected to occur within 2 to 5 trading days, and the profit target is 100-300 pips. The same trio of charts recommended for day-traders, above, would be suitable for short-term traders.

• A swing trade is a trade in which the entry and exit are expected to occur a week or more (up to several weeks) apart, and the profit target is 300-1,000 pips. Suitable charts for this style of trading might be the Daily, the 4-hour and the 1-hour charts.

• A position trade is a trade in which the entry and exit are expected to occur weeks, months (or even years) apart, and the profit target is 1,000 pips or more. A position trader might choose the Monthly, Weekly and Daily charts.

Regarding Lexy’s comments on scalping, in my view she is describing what I would call [I]hyper-scalping[/I] — that is, ultra-fast, ultra-short-duration trading at the extreme end of the scalping spectrum. As I see it, a trader who jumps into and out of 5-minute or 10-minute price moves, grabbing 5 or 10 or more pips at a time, is scalping the market, albeit in a different fashion than the hyper-scalper Lexy describes.

Regarding Jason’s comments above, I have simply divided his [B]Short-term trading[/B] into two styles: scalping, and day trading. And I have divided his [B]Medium-term trading[/B] into two styles: short-term trading, and swing trading. And what he calls [B]Long-term trading[/B] I am calling position trading.

One important thing to learn from this thread:

Whenever someone refers to any of these various labels (scalping, day trading, etc.), we need to ask how [I]that person[/I] defines the terms he/she is using.

.

11

On the contrary, Jonathan: as a visit to the trading-floor of any major financial institution in the world would immediately show you, most pro-traders are using [I][U]short[/U][/I]-term trading. :rolleyes:

12


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