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[Forex Trading Lesson of the Week] When it is Okay to Mix Time Frames
Source; Pixabay.com
The following is one of my 20 trading tips. This has served me well over the years but there are exceptions, as illustrated below. But first, see what I mean by:.
Stick to your time frame: Don't think like a position trader and trade like a spot trader.
This is a trap many fall into and just about all of us have experienced this at one time or another. What I mean by this is entering a short-term trade based on a longer-term bias without support for the trade on short-term charts. An example is buying into a dip knowing that it won’t last (i.e. longer-term view) but then getting stopped out when the market overshoots your stop to the downside. Another example, is buying or selling just because a currency looks too low or high based on a longer-term view, ignoring the current technicals and rtsk in the market.
It does not mean you cannot use different time frames in your analysis to gauge the overall risk in the market but be careful mixing time frames when trading (e.g. thinking in terms of a daily chart and trading based on a 5 minute time frame). In other words, don’t think like a position trader and trade like a spot trader (or vice versa).,
…and now for an exception: When it is Okay to Mix Time Frames
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Jay Meisler, co-founder, Global-View.com
[email protected]
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