What I mean is, for instance, would it be advisable to day trade in a sideways channel or consolidation?
Or does it have to be in an uptrend (or down trend)?
If it’s in a trend, does it have to be right at the beginning of the trend that you get in to make it worthwhile?
Also one more important question I have is, which time frame is most suitable for day trading? I know it would be something less than the daily candles, but which?
Lots of different opinions as far as best time frame to use when trading intraday. It depends on you and your style.
If price is consolidating, you can try catching the bounces at the top and bottom of the channel.
Wouldn’t consolidation be best suited for a scalping strategy?
If you want to leave a trade going for as long as possible during the day by trailing stops etc, wouldn’t a trend be the best option?
Not if your using a 4 hour chart.
And yes, a trend following strategy is probably best if you want to keep a position open as long as possible while catching a big movement in the direction of the trend.
But then again, if your a trend trader, you might benefit by trading larger trends and using higher time frames to do so. You’ll have to deal with a lot of noise if you attempt to follow the major trends on smaller time frames.
I get the best result by using H4 time frame for day trading, so for me, h4 is the best one for day trading! Besides, I draw support and resistant levels for understanding market trend status!
Breakouts of consolidation, yes.
But scalping isn’t viable for retail traders, and requires ultra-high-speed tick charts which few retail traders, realistically, are going to have the skill-set to use.
This makes no sense at all. You’ve misunderstood what was meant by “day trading”.
I’ve seen plenty of evidence of scalpers using regular 5m and 1m candle stick charts.
To say it very politely, you’re using the word “scalper” with a very different meaning from its accepted one in the trading community.
Scalpers are NOT using 5-minute charts! That has nothing to do with scalping.
Probably you’ve seen some people in forums saying they’re scalping, and taken them as being “scalpers”? They’re not.
What would you call them then?
“Fast intraday traders”? It doesn’t really matter.
The point is that “scalping” is something completely different, done in a different way, with different set-ups, totally different risk-management, specific software, and by different traders.
Anything that regularly targets profits appreciably bigger than the spread isn’t “scalping” at all.
Well why on this page does it say this:
“Be sure your targets are at least double your spread so that you can account for the times the market moves against you.”
Source: Forex Scalping - BabyPips.com
You’ll have to ask whoever wrote it - but it shouldn’t, really.
It’s true that scalpers use tiny stop-losses (smaller than a retail broker would allow, by the way) but again, for clarity: scalpers are NOT using 5-minute charts!!
That should certainly be changed.
Vlad, I think you’ve been misled, here.
“Scalping” and “trading from 5 minute charts” are mutually exclusive techniques.
Okay so trading on 5 minute time frames for quick trades would fall under the category of day trading, right?
There’s no hard and fast definition as to what scalping is, apart from the generally accepted description of it involving being in and out of the market for small individual gains. Yes, you can scalp on a five minute chart, just because you’re using a five minute candle/bar/block is doesn’t mean your trade has to stay open for five minutes - it could last a few seconds if the market moves. Take stocks/shares for example, much slower moving than FX pairs - FX scalping is the same as stock/share scalping but on steroids.
“Intraday” trading.
The term “day trading” causes some confusion.
With stocks, “daytrading” means settling up with your broker within the same day that stocks are bought/sold-short, and that’s the origin of the word. It’s done entirely on margin without ever paying for or buying the stock, because of daily settlement.
With forex, “daytrading” is used by different people with different meanings. Some even mean “trading from daily charts” (though that’s a strange use of the word, if you ask me). Some mean “never holding a position overnight”.
Forex trading through a retail broker is a whole different world from other types of trading, because no real trade is typically done in a real market - you’re just having a bet against your “broker” (who holds the other side of your trade). It isn’t a “real market” at all.
That’s something else very fundamental the lessons here should start by clarifying, really.
Intraday forex traders are typically using 5-minute/10-minute/15-minute charts, but often looking at higher time-frame as well, to get their overall directional bias.
But certainly trading from 5-minute charts is typically “intraday trading”, in the forex world, yes. People trading that way are usually not holding positions open overnight.
Hope that helps.
Actually, not always true, but for the main part it is certainly valid.
I know of a few retail brokers where you have DMA
Yes, but that’s not “this forum’s market”, is it? People here are using counterparty market-makers as brokers. And the forum’s designed for beginners, who should somewhere, somehow, be told that they’re not actually trading in a real market at all, and understand what that means, because it’s actually very significant to them!?
Do most traders use these types of brokers forever, or do they eventually move on to something else for whatever reason?
Then perhaps you can state that in your original answer, rather than making a sweeping statement about all retail brokers - which is factually incorrect. I knew exactly what you meant, but from a newbies prospective they would most certainly take that the wrong way.
You’d also be surprised, there’s a few here are far more advanced in there trading career than to be using MM’s.