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Long-term Traders will usually refer to daily and weekly charts. The weekly charts will establish the longer term perspective and assist in placing entries in the shorter term daily. Trades usually from a few weeks to many months, sometimes years.

Advantages:

  • Don’t have to watch markets intraday
  • Fewer transactions means less paying of spreads

Disadvantages:

  • Large swings which require large stops
  • Usually 1 or 2 good trades a year so patience is required
  • Bigger account needed to ride longer term swings
  • Frequent losing months

Short-Term Traders use hourly time frames and hold trades for several hours to a week.

Advantages:

  • More opportunities for trades
  • Less chance of losing months
  • Less reliance on one or two trades a year to make money

Disadvantages

  • Transaction costs will be higher (more spreads to pay)
  • Overnight risk becomes a factor

Intraday Traders  use minute charts such as 1-minute or 5-minute. Trades are held intraday and exited by market close.

Advantages:

  • Lots of trading opportunities
  • Less chance of losing months
  • No overnight risk

Disadvantages:

  • Transaction costs will be much higher (more spreads to pay)
  • Mentally more difficult due to frequency of trading
  • Profits are limited by needing to exit at the end of the day.

Shorter time frames allows you to make better use of margin and have tighter stop losses. Larger time frames require a bigger account so you can handle the market swings without facing a margin call.

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