Introduction - second section
|
|
|
by Dantes
Previously we have seen what is correct to treat based on the available
capital but equally important is to define broadly which type of trading
can be right for each of us.
The first factor to consider is the time that we can dedicate to trading
or even the time we want to dedicate to it, briefly, if the time available
is little, you need to focus on overnight trading but if you have a
lot of time, you can choose any approach, from pure intraday to overnight
or to a mixed approach. I can say that in both ways you can have good
results and both have strengths and weaknesses.
After the above we go to the next aspect that I would call basic:
the graph and time frame to be used for our analysis.
The graph is an essential element in our operational choices, so knowing
how to correctly read and interpret it is very important because it
will indicate the operational choice with more probability of success.
To define the time frame of the graph we must consider our previous
choice, that is if we are trading overnight our basic time frame will
be daily, while with the intraday we can range from minute to hour and
if we want even up to 4 hours, it depends above all on the threshold
of attention and personal operating speed. I can tell you that using
a one-minute time frame requires particular concentration and arriving
at the end of the day after doing over 100 small operations is extremely
stressful, so only very few have the skills to support such an approach
for several days and the undersigned is not among these.
In any case, whatever is your basic time frame for the trading, I suggest
you to carefully analyze the graph with the upper time frame, that is,
if you use the daily one you should also look at the weekly one; if
instead you do intraday, maybe with the classic 15 minutes, you will
also have to analyze the graph with a time frame of one hour.
The most important initial thing to decipher by looking at a graph is the current market phase of financial product we want to treat with:
- trend phase, ascending or descending;
- lateral phase, that is without a precise direction;
Although it may seem trivial, I insert two graphics as example.
descending trend graph;
lateral phase graph;
It is equally important to evaluate how long a certain phase has started and the probability that it will end or runs out, aspects that we will examine later; for now it is sufficient to understand the aforementioned phases, phases that develop and are present in each time frame. Having said that, in order to reduce the risk of our operations it is advisable to first identify the current phase on the upper time frame and then check and follow the graph with the time frame chosen as a base for finding the best moment in which do our operation. For example, it is reflected when even on the graph with basic time frame starts a trend phase in the same direction as the upper time frame: as a matter of principle, this increases our chances of success. Later, when we will go into the details of trading methods and ample space will be given to identification of the access point into the market as a fundamental part for a winning trading.
Greetings Dantes
dantes@tuttosi.info
DISCLAIMER
The pages on this site do not constitute a financial advisory service nor a solicitation to public savings. Since the indications given are given as simple food for thought, and are exclusively for educational purposes.
Contrary to what is reported by some advertising we want to clarify that on line trading is a risky activity, which should be faced with appropriate knowledge and preparation.
Who operates on the financial markets does so in complete autonomy and under his own and exclusive responsibility, therefore the author of this site and its collaborators disclaim any responsibility regarding any operational investment decisions made by the reader.