Many friends enjoy short-term trading, mostly due to the short holding time, quick results, and the thrill of the process. However, short-term trading is the most challenging among all trading methods and requires careful consideration.
Today, I will share my early experience of short-term trading with you. Specific methods and strategies will be provided in the later part of this article, which are closely related to practical applications and, I believe, will be helpful for you.
The article is quite lengthy. If you find it helpful, please give it a thumbs-up at the end of the article. Thank you.
Advantages and disadvantages of short-term trading
Short-term trading does not have a strict definition standard. When the market moves quickly, positions can be closed within a day, but if the market moves slowly, it may take two or three days to close the position, all of which belong to short-term trading.
On charts, I usually consider trades at the 5-minute, 15-minute, and even 1-hour level as short-term trades.
The advantages of short-term trading are:
(1) Short holding time and quick results. People are naturally curious about the unknown and want to know the results quickly. Short-term trading fits human nature, making it easier to control emotions.
(2) High trading frequency, providing a thrilling experience. Many traders are restless and want to trade multiple times a day, short-term trading meets this human need.
(3) The decay cycle of the short-term trading system is short, and the distribution of trading results is more evenly distributed, making it easier to execute. Sometimes, even with a losing streak of 5 times, the long-term trading strategy may take over a month to recover, while the short-term trading strategy may only take two or three days. Thus, short-term trading is less torturous to human psychology during a losing streak.
Disadvantages of short-term trading:
(1) High trading frequency requires more time and energy and is not suitable for part-time traders.
(2) Frequent trading generates high trading costs. Therefore, short-term traders need to pay attention to their commission fees. I have seen many futures traders who have had their accounts charged two or three times, or even ten times, the commission fees. How can they make a profit like this?
(3) Requires higher professionalism and attention to trading details. Short-term trading is more sensitive to changes in the market. Sometimes, when the market changes, you don't have much time to think and must act decisively. People with more procrastinating personalities are not suitable for short-term trading. Additionally, the margin of error for short-term trading is relatively low. Long-term trades do not require very precise entry points, and being off by 5 or 10 points does not have a significant impact on the overall trade. However, in short-term trading, being off by 5 or 10 points can be the difference between profit and loss.
Therefore, short-term trading is a delicate operation, and all trading details must be clear and easy to execute. Short-term traders also need to possess qualities such as attention to detail, boldness, calmness, and decisiveness.
So, how can you quickly profit from short-term trading? Next, I will share two strategies.
2.Plan One: Choosing Volatile Markets with Large Amplitude for Short-term Trading
As a short-term trader, we only need to capture a small segment of market volatility, and it doesn't have to be the overall trend, as long as the market volatility is fast and the amplitude is large.
The faster the market volatility and the larger the amplitude, the easier it is to make profits. For the same 100-point profit, it may take only one day to achieve it when the volatility is fast and the amplitude is large, while it may take several days to achieve it when the volatility is slow and the amplitude is small, resulting in a much lower trading efficiency and different challenges to our mentality.
Therefore, the amplitude of the product is the key to making profits in short-term trading. We need to selectively engage in short-term trading and not try to swallow all profits. There are two specific strategies to consider.
Strategy One: Directly select high amplitude products for short-term trading.
Different products have their own characteristics when operating in the market. Some products have fast volatility and large amplitude, while others have slow volatility and small amplitude. Before engaging in short-term trading, we must select the most suitable products.
For example, in the same breakout trading opportunity, products with high volatility and larger amplitude can achieve greater profits more quickly.
As traders, we all understand that the faster we can lock in profits, the more confident we feel. Therefore, selecting the right products makes short-term trading easier.
Moreover, if you choose a slow-moving product, your holding time will be longer, and your position may be occupied, which will reduce the utilization rate of your funds and affect the final profit. Short-term trading is about paying attention to details and maintaining a strong mindset, as even the smallest details can determine your success or failure. Therefore, do not be careless.
XAUUSD
EURUSD
Today, I will share my early experience of short-term trading with you. Specific methods and strategies will be provided in the later part of this article, which are closely related to practical applications and, I believe, will be helpful for you.
The article is quite lengthy. If you find it helpful, please give it a thumbs-up at the end of the article. Thank you.
Advantages and disadvantages of short-term trading
Short-term trading does not have a strict definition standard. When the market moves quickly, positions can be closed within a day, but if the market moves slowly, it may take two or three days to close the position, all of which belong to short-term trading.
On charts, I usually consider trades at the 5-minute, 15-minute, and even 1-hour level as short-term trades.
The advantages of short-term trading are:
(1) Short holding time and quick results. People are naturally curious about the unknown and want to know the results quickly. Short-term trading fits human nature, making it easier to control emotions.
(2) High trading frequency, providing a thrilling experience. Many traders are restless and want to trade multiple times a day, short-term trading meets this human need.
(3) The decay cycle of the short-term trading system is short, and the distribution of trading results is more evenly distributed, making it easier to execute. Sometimes, even with a losing streak of 5 times, the long-term trading strategy may take over a month to recover, while the short-term trading strategy may only take two or three days. Thus, short-term trading is less torturous to human psychology during a losing streak.
Disadvantages of short-term trading:
(1) High trading frequency requires more time and energy and is not suitable for part-time traders.
(2) Frequent trading generates high trading costs. Therefore, short-term traders need to pay attention to their commission fees. I have seen many futures traders who have had their accounts charged two or three times, or even ten times, the commission fees. How can they make a profit like this?
(3) Requires higher professionalism and attention to trading details. Short-term trading is more sensitive to changes in the market. Sometimes, when the market changes, you don't have much time to think and must act decisively. People with more procrastinating personalities are not suitable for short-term trading. Additionally, the margin of error for short-term trading is relatively low. Long-term trades do not require very precise entry points, and being off by 5 or 10 points does not have a significant impact on the overall trade. However, in short-term trading, being off by 5 or 10 points can be the difference between profit and loss.
Therefore, short-term trading is a delicate operation, and all trading details must be clear and easy to execute. Short-term traders also need to possess qualities such as attention to detail, boldness, calmness, and decisiveness.
So, how can you quickly profit from short-term trading? Next, I will share two strategies.
2.Plan One: Choosing Volatile Markets with Large Amplitude for Short-term Trading
As a short-term trader, we only need to capture a small segment of market volatility, and it doesn't have to be the overall trend, as long as the market volatility is fast and the amplitude is large.
The faster the market volatility and the larger the amplitude, the easier it is to make profits. For the same 100-point profit, it may take only one day to achieve it when the volatility is fast and the amplitude is large, while it may take several days to achieve it when the volatility is slow and the amplitude is small, resulting in a much lower trading efficiency and different challenges to our mentality.
Therefore, the amplitude of the product is the key to making profits in short-term trading. We need to selectively engage in short-term trading and not try to swallow all profits. There are two specific strategies to consider.
Strategy One: Directly select high amplitude products for short-term trading.
Different products have their own characteristics when operating in the market. Some products have fast volatility and large amplitude, while others have slow volatility and small amplitude. Before engaging in short-term trading, we must select the most suitable products.
For example, in the same breakout trading opportunity, products with high volatility and larger amplitude can achieve greater profits more quickly.
As traders, we all understand that the faster we can lock in profits, the more confident we feel. Therefore, selecting the right products makes short-term trading easier.
Moreover, if you choose a slow-moving product, your holding time will be longer, and your position may be occupied, which will reduce the utilization rate of your funds and affect the final profit. Short-term trading is about paying attention to details and maintaining a strong mindset, as even the smallest details can determine your success or failure. Therefore, do not be careless.
XAUUSD
EURUSD
Even for varieties with large fluctuations, their fluctuations cannot be static, and they will alternate in size.
If you observe carefully, you will know that the amplitude is also alternating in cycles. Why is this happening? Because the market is always switching between shocks and trends, the amplitude shrinks when entering the shock stage, ends the shock stage, and expands in the trend stage. Sometimes after shrinking and oscillating, even if you don’t get out of the general trend immediately, due to the severe space compression, the next trend will enter a larger shock range. As long as the shock range becomes larger, short-term trading will have the advantage of profit. It's like the tighter the spring, the bigger the rebound.
So how to choose a stage with large volatility?
It's very simple, put the k-line chart of a certain variety at the daily line level. When the daily k-line of this variety closes the small daily k-line continuously, it means that the amplitude of this variety is shrinking. Usually after a few days of contraction, the amplitude It will expand, and it will continue to run with a large amplitude for several days.
Precautions:
(1) In actual combat, you can choose several fixed varieties. When some of the varieties shrink in amplitude and fluctuate within a narrow range, you can start short-term trading. The specific cycle can be summarized by observing the rules of the daily line.
(2) Method 2 is an extension of Method 1. Combining the two together makes the transaction more detailed, more efficient and easier to make a profit.