Higher Time Frames First
When it comes to tutoring people to trade we inevitably face the hurdle of convincing the student she needs to start out identifying trend shifts on the higher time frames first – monthly and weekly — and gradually work her way down to the lower time frames – intraday — if at all.
In fractal geometry it has been determined that when one drops down to a lower scale the structure is still very similar to the next higher scale, but varies to a slight degree of complication. What that means is what starts out appearing very similar as you move slowly up or down the scale looks completely different due to compression the further along the scale you move. If we apply this to markets we say that day-trading using 3 & 15 minute charts is going to be significantly more complicated than position trading the daily and weekly charts. From an education point of view you should learn to trade the higher time frame first. An advantage of trading the higher time frames is that you will have an improved risk/reward.
The best day-trader I know considers himself a position trader first, and has a separate, smaller account for those times when he trades the lower time frames.
Jay Norris is the author of Mastering the Currency Market, McGraw-Hill, 2009, and a trading instructor at Trading-U.com
DISCLAIMER: Forex (off-exchange foreign currency futures and options or FX) trading involves substantial risk of loss and is not suitable for every investor. Risks include the potential that changing political/economic conditions may substantially affect the price/liquidity of a currency. Investors may lose all or more than their original investments.