What time frame are you trading in?
On November 25th, I wrote, “Don’t
Chase the Market,†because I felt that our risk/reward ratio was high.
The part of that sentence that I left out was that the risk/reward ratio was
high…. for my trading time frame. As a matter of fact, I actually bought some
long positions on November 29th and November 30th that I sold yesterday
(December 1st) at the close.
My time frame tends to be about a week, give or take a few
days depending on when my signals tell me to get out of a position. The reason
that I am writing this is that we all have to know the average duration of our
trades from the time that we enter those trades. Knowing your time frame from
the start of the trade is important because it tells if you should be taking the
trade at all. This is having a trading plan ahead of time. You don’t know have
to know what your exit day is, just what is going to trigger your exit. Is it
time, a secondary indicator such as the RSI, or price? What this does is allows
you to act rationally and be able to make consistent decisions in all/most
market environments. It protects you from fear and greed, from going with your
gut, and from, “playin’ it by ear.†Those emotions are usually what damn us
traders and a clear plan protects us.
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