Four easy rules to trade in the lower time frame
The options trading profession has always been a challenging industry. People who are making tons of money in the options trading market always trade this market with an extreme level of discipline. They never break their core rules at trading and they always focus on long-term goals. You may expect everything from the Forex market but after trading it for few months, you will realize that options trading is all about precision. And for that, you need to rely on the higher time frame. Does that mean, we will never learn to trade in the lower time frame? Lower time frame trading is possible but for that, you have to follow some strict rules. In this post, we will share the top four rules which will allow you to trade in the lower time frame like a professional trader.
Use less indicator
As a short time frame trader, you should not be using too many indicators in the market. If you rely too much on the indicators reading, it will be a tough task to manage the risk profile. Most of the time, you will be messing things up as it is not possible for us to monitor tons of data from different kinds of indicators. That’s why professional options trader rarely uses more than two indicators in the market. While using the indicator, consider it as your helping tool. Never get biased just by seeing a positive reading in the indicator window.
Since you will be taking the trades in the lower time frame, you will have to eliminate many false signals. So, do not feel sad or frustrated if you have to ignore many trade setups in a specific trading session. Your goal should be finding the best quality trade setup in a higher time frame. If necessary, visit the company website of Saxo and see how the elite traders are trading the market with fewer indicators.
Learn multiple time frame analysis
As a new option trader, you may not know the process of multiple time frame analysis. This is the process by which you will be studying different time frames to eliminate the bad signals in the market. It might seem a tough task but if you keep emphasizing the higher time frame data, things are going to be very easy. While learning the process of multiple time frame analysis, you might often get confused.
To eliminate the confusion, you need to give priority to the higher time frame data. Always expect that the higher time frame trade signals will give you more profit. So, if your lower time frame trade setup doesn’t match with the higher time frame trade setup, you should ignore the trade signals.
Use of risk management technique
The lower time frame trader should be extremely good at managing their risk profile. Without learning to use the risk factor in a strategic way, people may blow up their trading account within a short time. Study the important variables in the market and try to keep your risk exposure below 1%. Once you become good at analyzing the major risk factor, you will become more confident with your actions and this will definitely improve your decision-making skills.
Never expect to survive in the options market without learning the risk management technique. Take your time and learn to evaluate the overall risk factor in every trade. Once you do that, you will become much more confident.
Trade with confidence
You should never trade the market with frustrations. Never forget the fact, confidence is the key to become a professional trader in the market. So, if you wish to make significant progress in your life, we strongly recommend that you develop your patience level to find a good trade. Once you start taking high-quality trades in the market, you will gain strong confidence in this market. This will definitely allow you to make better decisions in the trading industry and let you trade this market with a high level of precision.