FOREX TRADING- The Basics Explained in Simple Terms ( PDFDrive.com )

On the trading platforms, most brokers offer 1 minute, 5 minute, 15 minute, 30
minute, 60 minute, 4 hour, daily, weekly and monthly charts. That's the majority of
them. Some also offer tick, 10 minute, 2 hour and 3 hour charts. Remember all this
data is live and it's free.
Everyone wants to be a Day Trader! Myself included. I think it is just a romantic
notion that is built into the human make up. It is especially cool if someone asks you
what you do for a living, and you reply "I'm a Day Trader". It sounds impressive. I
wish it was that easy though. Because the charts and the data are so good, you are
always tempted to keep on shortening the time frame, where eventually you will be
trying to scalp off the 1 minute charts. This all sounds good in theory, but it is very
difficult to do.
Look, I'm not saying it can't be done as I am sure there are a few successful scalpers
out there. Not many I would imagine, but enough to show that it is possible. I have
tried all time frames, and even though I have probably had most success on the
longer time frames like 4 hours and above, I am still a Day Trader at heart.
Again, this is a decision you have to make, whether you want to be in a trade for
days or minutes. Trading the longer time frames will obviously give you less
trades, but more than likely larger profits, and spend more time monitoring than
actually trading. Trading off the shorter time frames will give you more action,
more spreads to make up and more than likely smaller profits. Then you would
have considerations like stop size. Trading on a Daily chart may require you to have
a stop 120 pips away from your entry price, and when you consider the 2% risk
rule, you would end up with a much smaller position size. Now, if you were trading
off the 5 minute chart and had a 15 pip stop, and using the same 2% risk, you can see
that your position size would be much larger. The trade of being the possible
potential profit as I'd expect to drag a lot more pips from a Daily chart trade than a 5
minute chart trade. Bit of a catch 22 here.
Then you have to decide which pair or pairs you want to trade. If you are trading
multiple pairs on the larger time frames, it is quite easy to do so. This may also help
with giving you more action, if that is what you are after. But trading multiple pairs
on the smaller time frames can be a little stressful and sometimes difficult to keep
control of when things start moving quickly. It also plays with your mind a little,
especially if you have a losing trade on one pair and try to make up for it on another
pair, which may cause you to ignore your normal exit rules. I think they call this
revenge trading.
If you are going to trade off the smaller timeframes, may I strongly suggest you
concentrate on one pair to start? This just makes life a lot easier and you can put all
of your efforts and concentration into this one pair.