We always hear the same piece of advice from the professional traders that always trade the higher time frame and if you trade the higher timeframe then you will have more winning trades. But is it really true? Yes, it is! When you trade the higher timeframe you have a better chance of finding the best possible trade setup. But still, there are some traders in the online trading world making tons of money by trading the lower time frame. In fact, some of them use the lower time frame data to trade the high impact news release. If you live in Singapore then you might have a chance to attend Forex seminar organized by the expert trader. Ask them about this fact and you will be surprised to know that the number scalpers in the online trading industry are huge. In your article, we will give you some amazing tips so that you can also trade the lower time frame with a great level of success.
Use of lower time frame during high-impact data release
The expert price action traders in the online trading industry use the lower time frame to trade the high impact news release. Prior to the fundamental news releases, they draw all the technical parameters in their trading platform. Most of the time the major technical parameters are tested during the extreme level of market volatility. So when the market test a key level for the first time after the high-impact data release the expert switch back to 5 minute time frame and wait for price action confirmation signal to execute their trade in favor of the market trend. If you are new then we highly recommend you to practice this system in demo account since the risk extremely high. When you place your trade by following this system make sure that you are not risking more than 2 % of your account capital in any given trade.
Use 100 day SMA
The shorter timeframe can be easily trade by using the 100 day SMA on the 5-minute chart. Some professional traders in the options trading industry often use this 100 day SMA as their dynamic support and resistance level indicator. If the price traders above the 100 SMA they simply execute their call option trade with 60 second expiry period. Similarly, when the price trades below the 100 days SMA, they go for the put option.Though this system is very profitable yet you should never use this system during the major announcement of the market. Most of the time, the critical breakout of the support and resistance level happens during this highly volatile period.
Use of Bollinger band
Bollinger band is a classic indicator to trade the lower time frame. But before you start using you need to know the existing trend of the market. If the market exhibit bullish momentum in the daily time frame then you will be looking for buying opportunity in 15-minute time frame by using the Bollinger band. The lower band of this indicator acts as a dynamic support level and the upper bank act as a dynamic resistance level. Some advanced traders often use the price action confirmation signal to increases their winning rate. If you can learn all the reliable price action confirmation signal of this market then you can even use the Bollinger band indicator to trade the 1 or 5-minute time frame.
Lower time frame trading is very risky. But if you can learn this art then you can make a decent amount of profit in every single day. As a short time frame trader you need to make sure that you are always following proper money management. Aim for high-risk-reward trade and if possible use the trailing stop loss features to maximize your profit potential.