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Types of Trading Deciding what type of trading we are going to carry out is one

of the first decisions that a trader needs to make.

It is not usually definitive as we grow as traders.

We will shape and adapt our trading to what we feel most comfortable with, that

best suits us, or simply what we like the most.

It is curious how at the beginning, when we first get into trading and

investing, most of us are drawn almost directly to the very short -term world

day trading.

Probably because our expectations at that point are completely misplaced and

see a large number of trades as a means to getting rich quickly.

This is a mistake.

It is no coincidence that most beginner traders start with short -term trading

and lose absolutely everything in a few days.

I think that everything is set up by brokers and trainers to ensure this is

case. Obviously.

We cannot generalize, since there are very good traders involved in scalping

day trading who win consistently.

But this is not usually the case.

What is usual is that inexperienced traders who trade under this approach

There are many reasons that support this hypothesis, but the main one, and the

one around which everything else revolves, has to do with the greater

randomness of this type of trading environment, or what is known as noise.

Noise is always present.

in all time frames, but it has a greater impact the shorter you go.

Noise can be understood as the activity that occurs but which does not have any

directional bias, such as that executed by high frequency algorithms, or that

which takes place at times of high volatility.

And obviously, the impact of this variable is different across short,

long time frames.

It is important for our type of trading to take this into account since it can

completely distort our analysis and approach at any given moment.

In addition to noise, another downside to short time frames is the fact that

information is updated much more quickly, which means you have to re

what's happening almost endlessly.

If you trade on 1, 5, or 15 -minute charts, keep in mind that every time

time period elapses, you'll have to analyze what just happened.

The time dedication that this type of trading requires and the level of stress

involved is truly overwhelming.

If you do not have the proper knowledge and experience, any attempt to do this

is almost certainly doomed to failure.

In the beginning, we all like to spend hours and hours in front of the screen.

would say it is almost necessary.

But there comes a point where you wonder whether there is any return that

justifies all that time invested.

And in most cases, there isn't.

and we sometimes forget a very important factor that directly affects our

decisions. Stress.

The level of concentration that we need to maintain during a session looking at

intraday charts is very high, and this can lead to an unhealthy level of

especially if you keep it up for a long period.

Ask yourself if you can see yourself trading in that environment 20 years

now. That may be the decisive factor.

These are aspects that are not usually talked about.

but I certainly believe that they require consideration.

It also helps us to get to know ourselves better and to identify our

and weaknesses.

This need for greater concentration and stress is directly related to the

possibility of making bad decisions.

You better believe it.

Maintaining the right state of mind is crucial.

Day trading is more likely to lead to bankruptcy, simply because the effects

one bad day are much more devastating.

Being in the wrong state of mind leads to bad decisions, over -leveraging,

coming up with strange trades, not using stop -loss, etc.

And we already know the result of all this.

Sending your account into the red.

Developing a medium -long -term trade in itself can already be considered an

indirect emotional management measure.

It really is the most suitable environment to take care of your mental

You avoid the possibility of falling into a state of paralyzing stress.

leading you to make bad decisions.

The amount of signals is naturally fewer. You have less exposure to the

and, if you follow the trading plan, the negative effects of having a bad day,

in this case, are much less devastating than if you were day trading.

Do you remember what I said about noise?

Here, too, this has less of an impact.

I personally believe that trading on more long -term charts, preferably daily

ones, may be the best decision for most traders.

especially for beginners.

Swing trading, in which a position is held for days or weeks, is much quieter.

It allows you to take your time to analyze without the rush of knowing that

five minutes a new bar will appear that needs to be evaluated.

This promotes more objective decision making as it both minimizes noise and

gives us enough time to analyze all the inputs we need to look at before taking

action.

Another advantage of trading over long time frames is that it allows us to

diversify our portfolio.

If you trade in very short -term time frames, 1 to 15 minutes, usually this

allows you time to trade in one or two markets, which makes sense, leaving you

fully exposed to the risk assumed in each of these.

By increasing the time frame, you will be able to maintain positions for a

greater number of assets, which will allow you to combine operations in

of a different nature, allowing you greater diversification.

This is something that is very important in order to maintain consistency in the

long term.

A final thought on this. You need to evaluate everything I have described

an objective point of view.

If you are a beginner, you should almost exclusively evaluate the trade -in

charts with higher time frames until you gain enough knowledge and experience.

In an intermediate step, you can begin to gauge what time frame you feel

comfortable trading in, one that doesn't lead you to experience high levels of

stress, that allows you to make decisions that are as thought through

objective as possible, and that suits your availability in terms of time.

Over time, you will have defined the type of trading with which you feel

comfortable.