I recently received an email from one of my list members with the following questions:
1.Â I will like to know the best trading Time scale that you use for trading that will show you theÂ trend direction, whether 5-min chart, or 10-min chart or other higher period charts?
2.Â When is the right time to trade the currency GBP/USD?
3.Â Can you give me any other advice to watch out for in trading the GBP/USD?
Can you spot the inherent problem with these questions?
The first question inquires about determining trend and the second one on the time of day to trade. What the inquirer fails to address is the timeframe of the trades to be made. Are we talking about scalping? About short-term trades? Maybe even about swing trades? And time is an issue with the last question as well. Without knowing what timeframe this trader is operating in, I cannot provide the answers for whichÂ he’s looking.
These sorts of information/opinion requests come often from new and inexperienced traders, folks trying to get a handle on what it’s all about and how to approach things.Â TheyÂ come fromÂ a lack of knowledge and experience, obviously,Â but oftentimesÂ they also come from a failure to really think through the best way for them to approach trading and the markets.
The above questions suggest to me that this person has come in to the marketÂ zoned in on day trading.Â The way he fails to actually mention his timeframe suggests an assumption either that I am a day trader and thus automatically think in those terms (I am not, and I don’t) or that day trading is what everyone in forexÂ does, so he need not be specific in that regard. If it’s the latter reason, he is most certainly not alone in that view.
The fact of the matter is that forex traders, like traders in all other markets, cover the full spectrum of timeframes. There are scalpers and there are long-term position players and everything in between. Anyone asking the types of questions posed above needs to make sure to identify the timeframe in question. It really makes a difference.
The other point I would make is that anyone who comes in to the markets and trading with a singular market and/or timeframe mindset needs to step back and evaluate things. While in the end they may have picked the right one(s), there is a chance that it’s just not a good fit. We all, individually, have to figure out what market, what timeframe, what instrument, and what approach is best for us to pursue our trading goals.