Simplicity and a lot of time – the key to success in trading in the foreign exchange market!

Finally, the time has come to talk about why I recommend using higher time frames for work, rather than trading intraday.

There are a number of problems that every trader working on lower timeframes faces, but for a number of reasons, we are not able to correctly identify these problems and even more so to prevent them.

1. Market noise- These are price fluctuations that are formed due to a short-term shift in the balance of supply and demand. Most often, this is the effect of the activities of the market maker. These fluctuations can not be predicted, from which they pose a great threat to transactions with low expectations. On time frames up to 1H, all local trends and the maximum profit size rarely exceed the daily average volatility. The average profit according to statistics is 400-500 points. At a given profit size, risk or stop order should approximately correspond to these values, and this is a big mistake. The market noise parameter directly depends on the volatility of the instrument and ranges from 300 to 400 points on a number of major currency pairs. If the size of our stop orders does not exceed this range, the likelihood that your stop will be hit by fluctuations in market noise is almost 100%, and consequently, the probability that the transaction is closed not by profit, but by loss is also about 100%. Avoid triggering stop orders from market noise only by increasing the size of the order itself, and this will lead to the adjustment of your trading strategy, which is absolutely unacceptable.

2. The emotional component- this is our reaction to the frequency of price changes and, accordingly, changes in profit/loss. It is no secret that one of the main factors affecting the final trading result is our resistance to stress. Professional traders who have spent years and even decades on the market suffer from excessive emotionality. It’s not worth talking about beginners, 99% of their transactions are closed only because of nervousness, and it does not matter whether it is a profitable or loss-making transaction. The reasons why nervousness arises is well known to everyone – it is greed and fear. Greed makes it difficult to soberly assess the situation and in those moments when it is necessary to admit a mistake and agree with a loss, it is greed that does not allow this to be done and gives hope in a quick market reversal. Fear is included when the transaction generates a profit. You get scared that the price will unfold at any moment and the profit that we already consider our own will begin to conceal before our eyes. On lower timeframes, these factors are especially acute due to the frequency of price fluctuations. The faster the price chart goes, the more emotions we experience and the more mistakes we make. On higher timeframes, price fluctuations are almost imperceptible, and therefore they cause fewer emotions, which increases the likelihood of correct decision making.

3. The “shadow or body” dilemma is the eternal question of any technical analyst. What is considered the top of the trend, the body of the candle or its shadow? The points of entry and exit from transactions directly depend on how you identify the trend, or rather, position the trend line on the chart. On lower timeframes, this issue is especially acute, since the level of market noise should always be added to the main price movement. Very often, the effectiveness of the transaction depends on the correct location of the trend line. On the higher timeframes, the sizes of the shadow of the candles relative to their bodies are not so distinguished, and the way to draw lines is not so important, and most often the lines of the higher timeframes represent price ranges, and the entry points to the deals are not so much dependent on the construction method.

4. Time spent in the market- This is another very important indicator on which much depends, and most importantly, our health. After all, if we devote ourselves to sitting at the monitor for more than half a day, we get tired mentally and physically, which causes more errors, irritability, and other related factors. And if we take the scalping strategy as a basis, then in general to get the result you need to devote at least 10 hours to trading. There is nothing good in it, and sooner or later we’ll just get tired and working on the exchange will simply cease to bring us pleasure, which will subsequently affect the result of trading. A feature of short-term time frames is the need for constant monitoring of our positions, and if the transaction is delayed, the time spent at the terminal increases. On higher timeframes, trading in most cases is conducted on the basis of the “bought and forgot” principle. And there is nothing wrong with that. You determined the parameters of your transaction, agreed with its necessity and completed it. Well, then we just wait for the result. Since the timeframe is large, the result does not come immediately, but after weeks and months. And most importantly, if you determine the direction of the price movement correctly, you simply watch how the price smoothly rolls in your direction. For monitoring, you just need to open the terminal for several minutes once a day and make sure your conclusions are correct. And all the rest of the time you can freely spend on your daily activities. then the result does not come immediately, but after weeks and months. And most importantly, if you determine the direction of the price movement correctly, you simply watch how the price smoothly rolls in your direction. For monitoring, you just need to open the terminal for several minutes once a day and make sure your conclusions are correct. And all the rest of the time you can freely spend on your daily activities. then the result does not come immediately but after weeks and months. And most importantly, if you determine the direction of the price movement correctly, you simply watch how the price smoothly rolls in your direction. For monitoring, you just need to open the terminal for several minutes once a day and make sure your conclusions are correct. And all the rest of the time you can freely spend on your daily activities.

As you can see, each of the positions described above clearly speaks in favor of working on higher timeframes. And this is simplicity, why complicate your work, if you can make it easier.

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