Forex Trading

FX Strategy Only a Matter of Time

Forex Trading Strategy: It's Only a Matter of Time

Are you seeking to develop coherent, replicable forex currency trading strategies?
If so, one of the primary considerations that you will want to address is your preferred time frame for executing trades.

Just as knowing a lot about one currency pair is generally better for your forex trading than knowing a little about many different currency pairs, it can be a wise and profitable choice to focus your energies on trading forex within fairly well-defined time parameters.

Three Time Frames to Choose From

If you're an intraday trader, you'll be looking to get in and out of currency trades within a matter of hours. You're scalping pips and proud of it as you make your daily fx trades.

If you're an intermediate-term trader, a few days to a week is your bag. You're looking for trends, but not waiting for a trend to end before you book profits.

If you're a long-term trader, you'll be looking to ride currency trends for three to six months. You're concerned with big picture economic conditions in countries and the world.

Nothing wrong with any of those forex trading strategies. Something missing, though, if you haven't at least considered choosing a time frame and sticking to it.

Unfamiliar Charts Make Eyes and Brain Hurting
Everyone who's ever traded currencies for more than a few hours has felt the feeling: I am looking at these charts, and I have no idea what I am looking at or for. I feel like I am in the foreign country and the locals are looking at my wallet and licking their lips.
Yeah, not a good feeling.

What is a good feeling, though, is when you get so familiar with your charts that reading them is like reading your native language, you don't even think about it, you just read.
It's difficult to reach that level of familiarity if you're constantly changing the time frame options on your forex charts. Not that you shouldn't apply different time frame charts to each and every trade--that's a great idea. But developing real literacy in one time frame can really pay off.

When you know your charts by heart, it's prime time to make serious dough.

Careful With the Day Trading

Successful forex day traders are not exactly threatening to overwhelm the earth. Extremely short-term day traders, or scalpers, are a breed apart who work hard for their profits. If you're not willing to work as hard as they do, scalping pips may not be for you.

Indeed, no discussion of forex trading time frame strategy would be complete without a recommendation that you think long and hard before choosing to the ultra-short-term time frame.

Doing the math is an instructive exercise in this respect. When you are trading, say, a one hour window, you must be ready to take profits at smaller pip intervals. For example, you may want to take profits after catching a move in the EUR/USD of 20 pips.
But now let's remember for a second--if you have a second--that the spread on each EUR/USD buy transaction is two pips. This means that your transaction cost is 10 percent of your deal.

Now contrast that with the forex trading strategy of an intermediate-term EUR/USD trader, who will set up to book profits on a move of 100 pips. The spread on the buy is the same, two pips, but the transaction cost is much less: only two percent, as opposed to 10 percent.

Nothing against day traders, only a friendly recommendation to think before becoming one.

Important Forex Information

The most important step in currency trading is finding the right broker; our forex experts can help. See our
reviews of forex brokers for more information.  

The earlier you can start building a forex trading system that works for you, the better off you will be when trading the markets. Learn to build forex trading systems.  

In order to understand when to sell short in the forex market, we must examine individual currency short selling strategies. Learn the strategy of short selling currencies.  

While it is true that the bigger your position, the more you can benefit from utilizing the carry trade forex strategy, smaller investors can beneit, too. Read about the carry trade.