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

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of the first decisions that a trader
needs to make.

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It is not usually definitive as we grow
as traders.

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

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

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

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

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day trading.

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Probably because our expectations at
that point are completely misplaced and

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

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This is a mistake.

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

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and lose absolutely everything in a few
days.

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

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case. Obviously.

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

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day trading who win consistently.

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But this is not usually the case.

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

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

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

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

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Noise is always present.

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

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

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

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which takes place at times of high
volatility.

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

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long time frames.

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

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completely distort our analysis and
approach at any given moment.

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

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

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what's happening almost endlessly.

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

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

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

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involved is truly overwhelming.

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

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is almost certainly doomed to failure.

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

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would say it is almost necessary.

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

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justifies all that time invested.

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And in most cases, there isn't.

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

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decisions. Stress.

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

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

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especially if you keep it up for a long
period.

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

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now. That may be the decisive factor.

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These are aspects that are not usually
talked about.

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but I certainly believe that they
require consideration.

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

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and weaknesses.

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

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possibility of making bad decisions.

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You better believe it.

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Maintaining the right state of mind is
crucial.

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

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one bad day are much more devastating.

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

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

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And we already know the result of all
this.

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Sending your account into the red.

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

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indirect emotional management measure.

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

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

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leading you to make bad decisions.

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

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

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

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Do you remember what I said about noise?

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Here, too, this has less of an impact.

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

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ones, may be the best decision for most
traders.

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especially for beginners.

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

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

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

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

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

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action.

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

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diversify our portfolio.

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

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

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fully exposed to the risk assumed in
each of these.

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

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

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of a different nature, allowing you
greater diversification.

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

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long term.

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

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an objective point of view.

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

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

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

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

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

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

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

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comfortable.