In our actual trading process, many investors like to engage in short-term trading, but many newcomers do not know how to trade short-term.
There are significant differences in the definitions of short-term trading; let me first share the trading levels.
The trading levels we commonly use are: 5 minutes, 15 minutes, 1 hour, 4 hours, daily, weekly. Of course, some use other timeframes as trading levels, such as 10 minutes, 30 minutes, 2 hours, 3 hours, 6 hours, 2-day, 5-day, etc.
5 minutes, 15 minutes, 1 hour, and 4 hours are short-term trading levels. This depends on the timeframes you commonly use. Short-term trading is brief and changes quickly; you should enter and exit using the same timeframe without mixing them up. For example, if you are trading on a 15-minute level, after entering, you should not look at the 1-hour market trends to exit because there are 4 fifteen-minute candles in an hour, and looking at the hour might lead to profit reversal or being trapped.
Some people define short-term trading as intraday trading, meaning this trade can be held for a longer time, but will be exited before sleeping.
So the definition of short-term trading is different for everyone; just follow your own trading habits.
There are two ways to engage in short-term trading: ranging markets and breakout markets. Short-term trading in a ranging market involves trading back and forth within a range, buying at the bottom and selling at the top. Short-term trading in a ranging market often has limited space, and most short-term traders prefer ranging markets because they tend to be more stable.
Breakout trading is about engaging in short-term trend trading.
There are two methods for breakout trading:
One type is when the market trend is relatively strong; enter during the breakout, which is left-side trading. Left-side trading may get stopped out if encountering a false breakout.
The other method is to wait for a breakout followed by a volume decrease pullback before entering, which is right-side trading.
The first type has a higher risk, while the second type has a lower risk and is more certain, but the downside of the second type is that it is easy to miss opportunities.
In my breakout trading operations, I enter part of the position when the breakout occurs and add to my position if the pullback does not break support. The advantage of this approach is that it reduces risk and avoids missing opportunities.
There are two important points to note when trading short-term:
The first point is being trapped; not setting stop-loss leads to being trapped all the way and eventually being forced to liquidate or take losses.
The second point is turning short-term trades into long-term ones; the strategy was originally to trade short-term, but due to a lack of risk awareness or overconfidence in trading skills, it leads to being trapped, and in an attempt to lower the average price, continuously adding to the position, resulting in greater losses. Regardless of the method of short-term trading, risk should always come first. No matter how good the market conditions are, always set a stop-loss upon entry.
Having the ability to understand market trends with technical analysis and having your own trading strategy, regardless of the method, the risk is controllable. If you lack the ability to understand market trends, have no trading strategy, or do not execute your trading strategy, the risk is uncontrollable.
