Wednesday, June 09, 2010

Trading the Short to Intermediate Time Frame

By Guest Blogger Jennifer Gorton from ForexIndicators

As an investor or trader, picking a time frame on which you plan to hold your assets is entirely up to you. There are many people out there that wish to close out their positions at the end of each day to avoid the risk of major market news effecting an open position. Recently, markets will move drastically during the overnight period due to new stories from around the world occurring during that time. If other markets like Asia and Europe are selling off there is a good chance that the U.S. stock exchanges will open lower and those who have held positions overnight will lose money. There are other traders who will take this risk because they are buying the asset to be held for longer than a few days.

If you are looking to become a short to intermediate term trader but do not want the risk of a big overnight move, trading commodities and currencies is a better option. The average investor can trade the commodities market, by way of the CME Globex electronic exchange, 23 hours a day 5 days a week. The currency markets are open 24 hours a day 5 days a week, giving you that one extra hour to place trades. Trading of commodities products and currency pairs after normal market hours will allow the trader to monitor his position in real time and close it out if necessary at anytime the market is open. He or she will not have to wait until the next day’s open outcry session when the price of the commodity he is holding might have fallen. This can allow the investor to have an intermediate time horizon for holding his investments with the safety of being able to trade most hours of the day. Many potential trades that people see occurring take time to develop. Sure you can make a few dollars day trading throughout the day but having to always watch the market might not be what you are looking for. The average investor will not want to day trade because of work related issues. They will not want to sacrifice their salary job to become a full time intraday stock trader.

The intermediate and short term investment style is for those who have a good idea but do not want to be at the computers all day. Commodities and currency trading allow you to have that investment mindset with the additional benefit of being able to have orders executed when you are asleep if necessary. Programming your trading software with predetermined buy and sell orders will allow you the ability to stop out a position if it starts to move against you. The same would also be true if hit your profit target at 2AM when you are asleep; letting your computer do all the work is the way to execute orders. Both commodities and currency brokers will allow their clients to submit limit orders at prices they want to buy and sell. This technique for the short to intermediate trader is widely used. Having a stop loss number where you will close your position and a profit target where you will take profit is a must. The various brokers will offer free forex indicators and free commodities indicators that can help you decide at what price these order should be placed. Along with the charting software that your broker will allow you to download, short to intermediate trading is the preferred style of investing. Using commodities and the foreign exchange market as a vehicle to trade is perhaps safer than the equities market because of the hours it is made available for trading to the average investor.

1 comment:

Blogger said...

I would suggest that you stick with the most recommended Forex broker.

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