Recently I switched to trade in a smaller timeframe in 5m/1m as I dont want to spend 6-8 hours on the screen (i trade only 3-4 hours with this timeframe), I managed to gain profit over the course, but somehow since the stop loss point was so small, the commission eat up most part of my profit.
Anyone facing the same problem?
Is trading 5m/1m possible with retail broker commission charge (FXCM i am trading with)?
Thank you so much for your reply
Hi TkMpZ,
It’s possible, but as you’ve discovered, the more frequently you trade for small gains, the bigger impact commissions will have on your profitability.
That’s why scalping, which is the trading style you have described, can be one of the most challenging, though it’s worth noting that high volume traders can qualify for discounts on their commissions with an Active Trader account.
Also, you seem to be under the mistaken impression that using longer timeframe charts will require you to spend more time in front of your computer. On the contrary, if anything it’s shorter term traders who tend to put in the most screen time, because they manage their trades manually.
With longer term trades, it’s possible to set your price levels with entry orders, stops and limits to execute even when you are away from your computer.
In regards to long-term trading vs. short-term trading, here’s an excerpt from an article by DailyFX analyst James Stanley:
[I]For some reason, many new traders do everything they can to avoid [long-term trading]. This is likely because new, uninformed traders think that a longer-term approach means it takes a lot longer to find profitability.
In most cases, this couldn’t be further from the truth.
By many accounts, trading with a shorter-term approach is quite a bit more difficult to do profitably, and it often takes traders considerably longer to develop their strategy to actually find profitability.
There are quite a few reasons for this, but the shorter the term, the less information that goes into each and every candlestick. Variability increases the shorter our outlooks get because we’re adding the limiting factor of time.
There aren’t many successful scalpers that don’t know what to do on the longer-term charts; and in many cases, day-traders are using the longer-term charts to plot their shorter-term strategies.
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]
Thank you so much for the reply Jason, does FXCMASIA also have to Active Trader Account service?
If you dont want to spend hours at your pc I would have thought trading on longer timeframes was the way to go, not small timeframes.
Set a trade in the H4 or H1 timeframes then switch off. Thats what I advocate in my Balls Of Steel thread and what many others (Pipmehappy, Yohec, etc) do.
Fewer trades also equals fewer commissions, although you have to bear in mind rollovers can work for or against you depending what you trade.
Great answer, Eddie…
And, Jason, as always, you are a great addition to these forums!!
You would have to confirm any discounts available to Hong Kong residents directly with FXCM Asia. However, I notice that your forum profile mentions you have dual residency in Hong Kong and Thailand. As a resident of Thailand, you can open an Active Trader account with FXCM Australia.
This is enlightening! I thought of this matter in the converse (short trades then long trades after a trader becomes seasoned). I’ve learnt something. Thanks for the inquiry.
I have found the more time I spend in front of the screen the worse I do.
I switched to a daily chart at the New York close. I have to be vigilant about stop loss and take profit