Short-term traders - scalpers (surfing) or market makers - cannot afford to think too much about deals. You also cannot have a very well-structured trading plan. Instead, this type of trader needs to delve into short-term trading patterns that you can unconsciously remember them and realize what to do in a matter of seconds.

On the contrary, traders who trade in the long term can make a comment about the market and calmly wait for confirmation signals. That is transaction planning and transaction planning!

A signal to a short-term trader would be a confounder for traders on longer timeframes. That is why traders feel as though they are self-destructive by placing orders in one style but then managing the trade in another.

  • At your target price
  • At your stop-loss
  • At some point between the two above
If a large percentage of your exits are in option 3 then it is very likely that you are managing your trading by emotion, not according to your plan. While there are instances where it is possible to minimize losses and take profits, over time - if your plan is a solid one - then you will tend to exit a trade with small losses - capital. Of course, can become a winning trade; And you will tend to exit the winning position sooner than it really is.

Note, if you are managing an emotionally planned rather than a planned transaction, then through your behavior, you are showing a lack of confidence in the plan. If the plan is solid enough, then it deserves more often than not it is followed. If you often do not manage the transaction the way you created it, then you are using short-term criteria to salvage the plan (emphasizing the short-term criterion over the criteria in the plan).

What is the reason for this? That could be a behavioral problem of anxiety. It could be due to wrong planning: either the position size is too large, or the stop loss is too far from your risk level or account size. It could also be that you are trying to trade a longer timeframe, while your cognitive skills and style are suitable for shorter timeframes. In addition, traders often destroy their trading plans when they do not have enough experience with them and therefore naturally feel a lack of confidence. This usually happens when you try to trade according to someone else's plan/setup without doing serious research yourself.

The advice for traders is to practice behavioral methods, drastically reduce the size of your trade (maybe even switch to demo mode), and then follow your plans. That will let you know if the plan is really right for you and it will also help you realize that the plan is worth following. You cannot expect yourself to eliminate signal noise in a short timeframe without confidence in what you see as well as in planning in the larger picture.

And here is the second exercise - one from Linda Raschke - that can be very helpful in dealing with information processing challenges in trading. Choose a time frame for practice. You can do this by trading in simulated mode and setting your chart to 1-minute, 5-minute, 15-minute, 30-minute, or 60-minute bars. You must adhere to the settings you choose throughout the session, not transition to longer or shorter timeframes. Then set the alarm for a random time in the next few minutes. When the alarm goes off, you must enter the market for the next period of the selected frame.

Example: you pick the 5-minute bar, so you need to be involved in the next 5 minutes.

You can sell or buy, but you must participate and you must manage the transaction at your chosen timeframe. Furthermore, you must hold your trade at least for the full duration of the bar (i.e. if you look at the 5-minute bars, you must hold for at least 5 minutes ...) but not hold for longer than 2 bars. time. Naturally, you have to prepare in advance levels of support / resistance or other indicators that can be used as stop loss and profit targets.

Reset your alarm at a different random time in the near future once you've exited the order and so on until the trading day ends. This will help you trade much more actively if you are trading 1 min or 5 min bars than if you were trading 30 min or 1 hour bars.

Make sure that, for each time setting (bar 1 minute, 5 minutes ...), you have to trade multiple times over several days. You have to force yourself to realize, plan, enter, manage orders and exit as a short term trader as well as a long term trader. Feel free to see any news, indicators or other data that you normally consider during trading. Over time, you will find out what kind of transaction - what information processing you feel most comfortable with and what you are best at. Would you prefer less trading with detailed plans? Or will you enjoy reading the market quickly in minutes? Which one makes you feel most natural? What makes you feel like you the most?