Trading Time Frames
Before you enter into a position, you need to know – beforehand – when you are
,going to exit the market. A trader is not going to hold onto a position indefinitely
that’s for sure. Knowing the time frame of how long you wish to hold onto your
open position will determine your exit points and prices. If you choose to hold a
position for, say, a week, your profit objective would naturally be higher than if you
were to hold it for a few hours because you would expect the price to move further
given the longer period of time
This is a personal decision which has to be made by the trader, depending on his or
her risk tolerance level, lifestyle desired, and the amount of time to be dedicated to
analyzing the market
:There are mainly four different types of trading time frames
1scalping
2day trading
3swing trading
4position trading
:These are explained below
1Scalping
This is the shortest time frame in trading; it exploits small changes in currency
prices. It describes the ultra-rapid action of opening and closing of a position within
a few seconds or minutes, with the aim of stealing a few pips from each trade. The
profit of the winning trade is small, while the number of such winning trades should
be big enough so that these small profits can add up to a decent amount
Scalpers usually need to have access to the tightest spreads and fastest connection
speeds possible, in order to carry out this bullet-speed trading with the tiny profits
They tend to do this many times a day so as to accumulate the little profits that are
harvested
Losses must be limited such that one large loss does not wipe out the profits gained
from many winning trades
Many forex market makers discourage this type of trading as they find it difficult
to cover the opposite side of the transactions, given the fast speed and numerous
orders entered into their systems