Traders in the Forex market are either trading with the short time frame or with the long time frame. In both the time frame, traders are taking risks. But however, there are some advantages that traders get when they trade in the longer timeframe. Remember in mind that traders trading in all types of timeframe needs an extreme level of patience and strong knowledge in the financial sector. If you do not know how to master the art of trading, your patience will not be fruitful in the market. Similarly, if you do not know how to wait for your trades, all your trades will bring you only loss. We are going to highlight on some of the advantages that traders can get if they trade with the higher timeframe.
Smoothens the market volatility: The first and foremost advantage that traders with longer timeframe get is smoothing the market volatility. The market of Forex is very volatile and traders can lose their money even with their capital. Most of the time, traders with short timeframe are taking greater risks and more prone to false trading signals. The longer timeframe traders are benefited in this scenario. However, if you trade the higher time frame then you will observe that the market is exhibiting less noise and you can easily place high-quality trades with an extreme level of ease. Most importantly your trades will not but closed by the wild false swings in the market and thus you will have a better chance of making a profit.
Give the market trend to turn in your favor: It is the logical conclusion when your market volatility is working in your favor. If there is no market trend which can cut your profit short, you have less chance of losing your money in the market. Most of the time, trading with higher timeframe gives the traders’ time to wait for the trend to move in their favor. Short time traders in the CFD trading industry cannot get this advantage. They have to close their trades even with a loss. Most of the long time frame traders are trend traders that mean they have higher chances of winning. It’s true that trading favor of the long term trend is little tricky and requires strong knowledge in the trading industry. So if you are new in trading then make sure that you learn the basic of the forex market and after that start executing the trade in favor of the trend.
Not affected by sudden outcomes: It is the greatest advantage of trading with a higher timeframe. If there is any major outcome which can put the market is a volatile movement, only the short time frame traders are affected. Longer timeframe traders will wait for the market to come at a stable movement and close their trades with a profit. They are not affected by sudden market outcome which can cut traders’ profit.
An extreme level of precision: Trading is all about precision. The expert traders at Saxo are always more concerned about high-quality trade execution rather than high frequency. So if you want to become a part of the successful trader’s community then make sure that you are more focused on quality trade execution. At your initial stage you will have a little bit of difficulty in mastering the art of précised trade entry but if you stick to your learning plan then within a few months you can just trade like the elite traders in the society.
Summary: Trading is an art and it requires pin perfect execution of the trading plan. If you are relatively new then make sure that you learn the basic of the market before placing any trade. Always try to trade the higher time frame and use price action confirmation signal for quality trade execution.