The higher time frame has always been the favorite time frame of the successful trader. There are many reasons for which the professional traders follow higher time frame data. But before we dig into the details we will give you some useful information which will give you a clear insight into the associated risk lower time frame trading. If you do the market analysis in the lower time frame it will be almost impossible to find the long-term market trend. There is saying in Forex market “Trend is a friend”. So you need to trade with the market trend to protect your trading capital. If you see a strong downtrend in the 30-minute time frame, you might see a strong uptrend in the daily time frame. The 30-minute time frame is just showing the retracement of the market. So it’s highly imperative that you avid lower time frame trading.
Why the professional traders prefer higher time frame?
The first reason is accuracy. In higher time frame market analysis you will get highly accurate trading signals. Most of the time the novice traders don’t know the importance of quality trades. They are more focused on trade execution rather than finding profitable trades. You don’t have to execute thousands of trades to become a Forex millionaire. Even a few trades per month is enough to secure your luxurious lifestyle. In the higher time frame trading, you don’t have to watch the market 24 hours a day. You can use the set and forget the rule.
It allows you to find high-quality trades
When you do the market analysis in the higher time frame, you will be surprised to see the accuracy in your trade execution. Most of the time, the novice traders don’t have any clear clue on their trade setup. They trade this market based on few simple principles. Everything is fine but their preferred time frame is killing the profit factors of the market. If you can do the in-depth market analysis in the daily time frame, you can easily place quality trades with low-risk exposure.
High-risk reward ratio
Risk reward ratio is very important in the exchange traded funds community. Even with a 50% winning rate, you can easily make money if you trade with high-risk reward ratio. The professional traders at Saxo are always looking for 1:2 or better risk-reward ratio to place their trade. On the contrary, the new traders don’t give any importance to the risk-reward ratio. They close their profitable trades early in the market with great fear. On the contrary, when the trade goes against them they start adjusting the stop loss with a great hope. At times you might get lucky but in the long term scenario, this will cause you heavy trouble.
Allows you trade in an organized way
Without having a simple trading routine it’s almost impossible to follow all the basic rules of investment. In the lower time frame trading, you have to deal with thousands of trading parameters. Being an active trader in the retail trading industry it’s really hard for you to deal with such factors. But if you start trading the daily or weekly time frame, you can easily eradicate the noise of the market. Try to create a simple trading routine based on your personality. You don’t have to trade all day long to make a profit. A few good trades are enough to secure your monthly profit. Just remember the fact, no one in this world can make a consistent profit.
Being a professional trader you need to give yourself some time. Stop chasing the lower time frame trading signal. Try to keep things simple in your trading career and it will dramatically improve your trading performance. Develop the strong confidence to make consistent profit in any market conditions.