Time frame is everything - Protecting Your FX Capital
In foreign exchange, we have a divide between position traders (longer than three days) and swing traders (three minutes to three days). Position trading generally delivers the highest returns because FX is a highly trending market, and this is what attracts newcomers.
After all, trading is not actually about making money – it’s about managing risk.
A dandy trick is to enter when the 15-minute, 60-minute and daily stochastic oscillator are coming up off an oversold bottom. In this situation, you target double or triple the average true range of the 60-minute bar as a profit goal and the average range as the stop. The secret lies in the confirmation of the same indicator in different time frames instead of multiple indicators in the same time frame, as in regular daily trading. Some traders use the weekly form of indicators to confirm buy/sell signals on daily data, but we have never found that useful in trading foreign exchange.
While multiple stochastic oscillator confirmations are useful in intraday time frames, do not neglect confirmation by other indicators, including breakouts. Support and resistance lines, moving averages (especially the magic 20-period moving average, which seems to work in all periods over two minutes) and momentum are all as valid on the intraday chart as on the daily chart. If you see your price retrace through a support line, for example, you can exit early for a smaller loss or even a small gain – even if your stop has not been hit. You don’t have to make every stop the worst-case stop.
Be wrong instead of being nothing - do crazy things and leave your ego behind - this is the Way of Growth Scaling into a loosing position