Which time unit to choose in your trading?

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The choice of time unit in trading determines the frequency of your trades. The smaller the unit of time, the greater the number of signals. Getting a lot of bullish/bearish signals is good, but you need time to monitor your trades and be responsive. Generally speaking, the smaller the unit of time, the more time you need to devote to trading. It is important to be able to stay focused on trading and nothing else. The choice of time unit depends on the time available, and the trader’s trading preferences. We can distinguish 3 main categories of people in trading: The full timers, the part timers, and the "don’t have timers".

What time unit for a full-time trader?



A full-time trader is a trader who is not limited by time. They have all day to trade. In this case, the available time does not count in the choice of the time unit. It is the trading preferences that will guide their choice.

If you want to scalp, there are no questions to ask, it is very short term trading. The time unit will go from tick to 5 minutes at most.

If you want to swing trade, all possibilities are open to you. It is up to you to determine the unit of time that you feel comfortable with, the one that does not stress you too much. If you are stressed by nature, favour larger time units (not less than 1 hour). Similarly, if you are new to technical analysisyou will be slow to locate the different chart elements. Give yourself extra time by opting for a large time unit.

There is no one time unit that is better than others. No study shows that there is a link between the performance achieved and the time unit used. Fewer trading opportunities does not mean lower performance.
The more positions you take during the day, the smaller your positions should be. It is very important to adapt your risk management according to the time unit chosen. Indeed, on a 15 minute chart, the gains/losses are of the order of a few dozen points at most, whereas on a daily chart, they are in hundreds of points.

The right unit of time is the one that suits your investor profile. The one you perform best with!

What time unit for a part-time trader?



A part-time trader is a trader who only has an hour or two per day to trade. The choice of time unit is therefore reduced compared to the full-time trader. There are two possibilities:

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Do very short term trading

: If you have 2 hours during the day, you have plenty of time to place trades on very short time units. Either you do scalping or you swing trade on a time unit that does not exceed 10minutes. That gives your trade concept time to come to fruition.

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Medium/long term trading

: If short-term trading is not your thing, opt for a time unit between one hour and a month. The 15 minute and the 30 minute, are both too short to give time for your trade concept to come to fruition, and too fast which means you are obliged to monitor your trade too regularly. From 1 hour, you can for example place your orders at noon, and make a quick check at the end of the day after work to see where it is. The longer the time unit, the less you need to monitor your trade. Trading time is then reduced.

Whatever happens, NEVER forget to put a stop loss on all your trades! Even if you stay in front of the screen it is still essential, if you cannot supervise your trades, it is an absolute obligation!

What time unit for a "don’t have time" trader?



A "don’t have time" trader is, as the name suggests, a trader who does not have the time to trade. Here again, we can split this into two types of people:

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Those who don't have time to train for trading

: In this case, there is nothing to say, it's a personal choice. We have the time to do things we want to do. Trader training takes a lot of time. Financial market experience is a very important element. A training phase is essential. It results in making a lot of mistakes which are, unfortunately, very useful to make to progress in trading.

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Those who don't have time to trade

: If you've trained in trading and you say you don't have time to trade, it's because you see trading as a short-term activity, which should be done in small time units. Time units range from tick to monthly, you can keep certain positions several weeks or months. Without going as far as that, you can very well trade in the medium term (you can forget short term, it takes too much time). Your time unit can then vary from 4 hours to monthly. That gives you a lot of options. I don't know why medium/long term trading is stuck with this bad image, as if it wasn't real trading.

Some trading tips



What counts in trading is to last, before thinking about making money. Most novice traders want to do short term trading but they are not prepared for it. Everything goes faster. So you need to be more reactive, know how to manage volatility, know how to manage stress and emotions, be able to detect trading signals at a glance on a chart, etc.

To start with short term trading is to shoot yourself in the foot. Try yourself first on time units that give you time to analyse properly, and then, if you feel ready, you can test trading the smaller time units (but not before). After that, it's all about your trading preferences.

When I say try trading, I mean a demo account. It is important to determine the time unit that suits you best, unless you have real money to lose. Learning to trade is not a sprint, it's a marathon. Your money is your work tool, so you must preserve it to the maximum and use it wisely!

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