To answer this question requires a definition of terms.There are at least 3 styles of trading namely 1) Active Trading 2) Momentum Trading 3) Swing Trading. The difference lays in the duration one holds a position.
1)Active Trading- holding a position for a 1 to 4 day period
2)Momentum( scalping) Trading- holding a position for a period of a few seconds to a few minutes.
3)Swing Trading- holding a position for at least a few days to a few weeks.
So which style do you want to pick?
Your choice may be dependent on your emotional and psychological make up. If you are a risk averse person who wants to sleep soundly at night without having to worry about what can happen the next day then momentum maybe the way to go. If you are capable of holding overnight risks and having the fortitude to deal with 2 to 5 day volatility then the active style may be your comfort level. For those who are willing to take bigger risks for bigger rewards and are emotionally in control of fear and greed then join the Swing Trader club.
After deciding what camp you belong to then you develop a Trading Plan that captures the appropriate time horizon matching your trading style.
What doe this entail?
Simply speaking the methods are essentially the same across styles the basic variable here is what price data you will utilize to trigger your entry and exit points. The methodology can be the same.
In other words, if you are an ACTIVE trader you would apply your method on daily ,hourly and 15 minute intervals. A MOMENTUM (scalper) trader will apply it on tick, 1 ,5 to 15 minute intervals. A SWINGER will focus on 2 hours, daily,weekly, and even monthly intervals.
To be more precise don't use a 1 minute price chart if you hold positions for days and weeks. It is a useless chart for your needs. If you are a momentum trader a daily/weekly chart will not provide you with a sensible picture.
An example to review is the method of analysis that I have shown in the more recent videos( with a 15 minute chart) on this blog. I have focused more in ACTIVE trading ( 1 to 5 day moves). Take note that a bullish move or a bearish move can last for a few days only which matches an active style. If I wanted to follow a SWING move then I will be focusing my attention to the daily and weekly chart and not necessarily use the 15 min charts. If I wanted to catch the intra-day micro trends(momentum) I would be using 1 and 5 minute charts.
So the bottom line is that one has to use the proper time frame matching
the trend one is trading.
One final note when one claims he/she buys and holds a stock and reviews his/her positions maybe 2 to 4 times a year this is not TRADING this is INVESTING.
© Copyright 2016, BizWhizPH