The myths of high time-frames
There are many myths in retail trading but the one that trading higher time-frames is easier is probably among the most talked about. Is it really true? Does trading higher time-frames allow you to “look through the noise” and see the “real” price action, as the advocates of higher time-frames suggest?! In the following we discuss 3 reasons why trading high time-frames can actually be harder and lead to bad trading.
Why it’s not true #1: Patience and trade entries
The most obvious reason why trading high time-frames is often more difficult is because of the patience that is required from the trader. By default, most amateur traders struggle with patience and entering trades too early, not waiting for all entry criteria to be present or being bored and randomly entering trades is already one of the main reasons why so many traders fail.
Moving to higher time-frames where entry signals are even less frequent will rarely do any good. If you get 3 trades per day on the 1H time-frame, you might only get 1 trade every 2 weeks on the Daily time-frame. Imagine having to wait 2 weeks for a single trade and patiently sitting on your hands. You might say “well, then I just add more markets to my watchlist” to counter this effect – we will discuss the impacts of such an approach under point #3.
If you are already struggling with patience in your trading, moving to higher time-frames will usually not go well with your personality.
Why it’s not true #2: A longer holding time and in-trade decisions
Let’s say you have waited patiently for a few weeks to get your trade entry. Now you are presented with a completely new set of problems. Trading the Daily time-frame means that you have to hold trades for days and often weeks. Amateur traders struggle a lot when it comes to trade management and in-trade decisions. Having to sit through retracements that can last for several days can become a real challenge then. Or, holding a winning trade for days and weeks and patiently keeping your trigger-finger off the mouse and not closing the trade prematurely can be really hard.
If you have problems with letting your winning trades run and easily get nervous when price moves against you, trading high time-frames will compound this effect.
Why it’s not true #3: You can’t just watch more markets
One argument of the advocates of higher time-frames is that you can just watch more markets to counter the effect of a longer waiting time. Unfortunately, it is usually not that easy. Different markets behave very differently and your trading methodology has to be adjusted for each market.
Volatility, how markets respond to price action, general price and momentum dynamics can vary significantly between different markets. A trader who tries to apply his trading methodology like a template across different markets often sees very mixed results.
The choice of time-frames is very personal. How Edgewonk can help
One size fits all does not apply to trading and the choice of your time-frame. You have to be self-aware and audit your strengths and weaknesses. While some traders might do better on higher time-frames, other traders will outperform on the lower time-frames.
With Edgewonk, we usually advise our users to set up one Custom Statistic to track the different time-frames; for every trade you take, assign the time-frame which you choose to make the trade entry. With the help of the Edgewonk analytics you can then find out exactly which time-frames work best for you and where you struggle the most. Edgewonk helps you take out the guesswork and shows you what is really working for you!
We offer a free trial for the Edgewonk trading journal. Test it for free and see how it can help your trading:
