Stocks & Commodities V. 24:8 (44-47): What Time Frame Is Right For You? by Thomas Bulkowski

Stocks & Commodities V. 24:8 (44-47): What Time Frame Is Right For You? by Thomas Bulkowski

Finding the right time frame for your trading may make life easier for you — and your trading successes more sustainable.

A trader I’ll call Jennifer made big bucks at her sales job, and her lifestyle matched her income. She drove a fancy car and lived in a big house. Between sales calls and in her off-hours, she developed a foolproof trading system. So she quit her job and started trading bonds and currencies full time.

I read a recent study that looked at income from traders. Just 4% of those surveyed made more than $50,000 annually. In her first year of trading, Jennifer made twice that, but she wasn’t satisfied. She disliked sitting in front of a computer screen all day. She wanted the freedom to play on Cape Cod, go whale sighting off California, and splash her toes in the waters of the Caribbean. “I want to do what you do,” she said to me. By that, she meant making fewer trades each year while having the time to till the garden, tend the tomatoes, and still make big bucks. I call it position trading. To get a feel for the different time frames and styles of trading, I asked nearly 70 traders for information on their trading style. Here’s what 20 of them had to say.

THE SCALPER

Pete is a scalper. He doesn’t stand outside concerts hawking hot tickets, but rather he profits from market inefficiencies, holding positions for just minutes. He’s an in-and-out trader who makes money on small price changes. His computer systems and software are custom-designed for his trading style. With the push of a button, he can be in and out of a trade in seconds. That’s vital in today’s fast-paced markets. He will make several trades each hour, but his time trading (not time holding) is relatively short — about two hours each day. The remainder of his day he uses for research and following market developments.