By James Woolley

The majority of the people who develop an interest in forex trading are immediately drawn to the shorter time frames such as the 1, 5 or 15 minute charts. This is obviously because you can make some nice profits within a matter of minutes and there’’s plenty of decent set-ups throughout the day, however this certainly isn”t the easiest way to trade the markets.

You see the problem is that on these shorter time frames the price will be moving all over the place. For instance if you watch the 1 minute or 5 minute charts for any currency pair you will notice that there are times when technical analysis is completely useless because the price just seems to be drifting aimlessly. So therefore it is impossible to predict which way the price is going to move, and therefore almost impossible to make any money.

However if you move up to the longer term charts such as the 1 hour or 4 hour charts, then you won”t even notice these random price movements because they will be hidden within the longer term trend. Therefore you could reasonably argue that these longer term charts are a lot easier to trade.

Don”t get me wrong, you can make money on the shorter time frames and I often trade the 5 minute and 15 minute charts myself during the day, but it’’s so much easier to trade the longer term charts. Indeed my own strategy involves both the 4 hour and daily charts in that I use the daily chart to identify the long-term trend and the 4 hour charts to obtain a good entry point.

I have a very high success ratio using this strategy simply because the trends on these time frames are much clearer and they last a lot longer. So you only need one or two good trades a week to make some very handsome profits. Compare this to day trading where you may be placing ten or more very stressful trades per day and still not generating the same kind of returns.

So the point I want to get across in this article is that you shouldn”t place too much emphasis on short-term trading because this is possibly the most difficult way to trade the markets. My advice to newbies would be to always focus on finding a profitable longer term strategy that you can use first of all, and only then look for additional short-term strategies if you so wish.

About The Author

Click on the following link for free forex tips and strategies, including the exact 4 hour trading strategy that James Woolley uses himself to trade the markets:

http://theforexarticles.com

This entry was posted on Thursday, July 2nd, 2009 at 3:23 pm and is filed under Uncategorized. You can follow any responses to this entry through the RSS 2.0 feed. You can leave a response, or trackback from your own site.