Lower time frame trading has always been one of the most difficult tasks for retail traders. Even after knowing the risk factors of lower time frame trading technique, the novice option traders tend to take their trades in the minute time frame. Since most of them don’t have strong analytical skills, lose a big portion of their trading capital in lower time frame trading.
Does that mean we can’t take the trades in the lower time frame? Do we need to stick to the higher time frame trading method from the starting of our career? Well, if you follow some basic rules for the lower time frame trading method, you can trade in any time frame regardless of your experience. Today, we are going to share some valuable tips which will allow you to trade the lower time frame like a pro trader.
Strong knowledge of support and resistance
Support is a critical price zone where we looking for the buying opportunity. On the contrary, resistance is a critical zone where we look for selling opportunities. To find reliable trade signals in the market, we must learn about the support and resistance level from the scratch. Once we become good at analyzing the support and resistance level, we should be able to find reliable trade signals in the lower time frame. Thus the overall trade execution process in a lower time frame will become much easier.
Learning about the price action signals
If you want to trade options UK, you must learn about the price action confirmation signals. When you will take the trades at the key support and resistance level based on the Japanese candlestick patterns, you will become much more confident with your actions. You will be able to take high-quality trades with a great level of precision. But to learn about the candlestick pattern trading technique, you need to rely on the demo trading account. Unless you trade the market in the demo environment, you will never know what it takes to become a professional price action trader.
Trade with the core trend
To protect your trading capital, you must take the trades with the major trend. Since you will be taking the trades in the lower time frame, you must find the long-term trend in the daily time frame. Studying two different times to find one good trade setup is often known as multiple time frame analysis. So, being a short time frame trader, you should be extremely skilled in the multiple time frame analysis processes, or else you will be losing money from most of the trades. So, take your time and learn to study different time frame data as it will make you more confident in your trading actions.
Study the major chart patterns
The lower time frame traders also need to learn about the chart pattern trading technique. By learning to trade the major chart patterns in the lower time frame, the traders can easily avoid many false signals. They can find short-term changes in the market. But knowing about the chart pattern is a tough task. Unless you spend enough time in the demo trading account, you will never know what it takes to become a professional chart pattern trader. At the initial stage, learn about the continuation patterns. Once you become good at using the continuation chart pattern, you may start trading the market based on reversal chart patterns.
Risk management policy
Smart traders love to trade the market with low risk. If you trade the lower time frame with a very high risk, you are going to lose money most of the time. You will become confused with your actions and thus you will never learn what it takes to become a professional trader. So, learn to deal with low-risk trading approaches in the options trading business.