The Benefits of Trading Less

Filed under: Learn Forex Trading |

Most beginners to forex trading believe that if they work hard, and spend more time staring at their charts, then they will get success. However, this couldn’t really be further from the truth. While this could work for some people, generally, spending too much time looking at the screen tends to encourage over-trading; and over-trading is not a good thing.

 

By spending a lot of time looking at the forex currency charts, you inevitably end up trading on the lower timeframe charts. The lower timeframe charts are less reliable, more volatile, and the spreads are more significant. It takes a great deal of skill to be profitable when trading off of the lower timeframe charts. I would not recommend even looking at a timeframe of less than 1-hour.

 

A good alternative could be to only look at your charts once every day when the daily candles close and a new one opens at the New York close. By only using the daily charts to find setups, you are giving yourself a greater chance of success. The levels of support/resistance are much stronger on the daily charts because these are the charts that most professionals use. The spreads are less significant because your stop loss and profit target will be inevitably wider with regards to pips, and you will have more time to assess the markets and not make any rash decisions, as you might do on the lower timeframes as you watch the volatility play out.

 

By trading on the daily timeframe charts and making fewer trades, you might find that you are more profitable, despite trading less. Your strike rate may improve, and you may find that your confidence grows because you are making slow, calculated decisions rather than decisions in the heat of the moment. The story of the hare and the tortoise is a potent one because it is one that holds a lot of truth. We all know who wins in the end.

Leave a Reply

Your email address will not be published. Required fields are marked *

You may use these HTML tags and attributes: <a href="" title=""> <abbr title=""> <acronym title=""> <b> <blockquote cite=""> <cite> <code> <del datetime=""> <em> <i> <q cite=""> <strike> <strong>