I’ve just been through the School of Pipsology and I’ve learned so much - thank you Babypips. I used to trade stocks and so I feel comfortable with most issues such as risk management, use of indicators etc, but the one thing I’m finding difficult (and did when trading stocks) is selecting a timeframe/trading style. I feel that I could have made better trades if I’d got the correct timeframe/style combination, so this is a key point for me.
Here’s the issue. I’m UK based and I’m free to trade all day Mondays, Tuesdays and on Wednesday morning. On Wed-Fri I could trade after 6pm UK time, but I’d prefer not to trade on Fridays or Sundays. I’ve identified I want to start trading GBP/USD. I don’t mind holding positions overnight - the average holding period of previous (stock) trades has been 20 (calendar) days. But, theoretically I could day trade on Mondays and Tuesdays (though I have no experience of day trading). About the only thing I’m clear on is that I don’t want to confuse myself with what should be a simple choice of timeframe/style.
So, given my situation, time available etc what timeframes would you choose? What style would you choose? Should I forget the fact I have Mon/Tue available to me and just trade daily charts after 6pm Mon-Thur - and if I do that is swing trading the style to follow? Or should I forget the evenings and just go for day trading on Mondays, Tuesdays (and Wednesday morning) and if so should I use 60 minute and 15 minute charts for trend identification and trade signal?
I realise there are so many questions here, but I really appreciate any advice you can give (and hope I don’t annoy you too much if I come back with more questions on the same issue).
None of us can really tell you what the best thing for you to do is with something like this. It’s a very personal decision you have to make for yourself.
When I talk about this subject with my students and readers the first thing I recommend is that they think in terms of what is the shortest timeframe at which they can consistently operate in the markets. For some people, while they can periodically check prices and stuff during the day, the can’t be assured of doing so, but can do so in the evenings after work. Others find the demands during the week too much to allow for consistent market work and have to stick to weekends. Others have clear blocks of time each day during which they could trade short-term.
Here’s the wrinkle in there. Just because someone has the schedule which would allow them to “day trade” doesn’t necessarily mean they should. There are a lot of additional considerations, not the least of which is the ability to handle the mental focus and intensity required to trade that frequently.
There is also the question of the types and size of the risks you would be willing to take, the willingness to hold trades overnight (or longer), and other considerations.
Also, reverse the question a bit. Instead of asking (essentially) “How much time should I put in to trading?” ask yourself “How much time do I want to put in to trading?”
Thanks for that, it’s really helpful. I think I was just getting confused between what I’d like to be able to do and what I actually have time to do. As you say it’s about being able to consistently operate in the markets and pitching a timeframe around that. Thanks again.