Everyone is a news trader – in that you can’t afford to ignore the instant impact and then the medium/long term consequences of news – so everybody is alert to short-term impact, and then the medium, long-term fallout. But what about your general strategy?

The timescales that traders operate in fall reasonably neatly into 3 groups.

• Intraday or day trading – all trades are closed within the day.
• Short-term or swing trading – some trades rollover
• Long-term – think months or even into years.

Long-term currency traders have the capital to absorb the swings that would wipe out us lesser types – they are backing their fundamental analysis.

If you’re a swing trader, most likely 4 hour, daily, and weekly charts are quite sufficient. Find the happy medium and place some limits – keep to the charts relevant to your style. Don’t sit there with a 15-minute chart trying to make strategic decisions.

At the beginning, most people go where the action seems to be, the 5-min or even 1-min charts, they dip in and out of the market, opening and closing 10-15 trades a day – it gets the adrenalin going for sure, it doesn’t usually produce the goods.
It’s always held that the quick impetuous types want the short and this will fit their personality. And the calmer more considered type will go towards the longer time frames.

If the action is too fast, you’ll just be feeling extra pressure – and that’s pressure over and above that of knowing your money is on line – which is a definite recipe for poor decision-making.

Equally, if it’s all too drawnout for you, with the temptation of messing with open trades starting to get too much… get into a shorter timeframe.

Not far to go now, it’s on to 19. Commodity Currencies →