One of the major pitfalls that I have found in my own trading is getting stuck in a very short timeframe. I sometimes get so focused on what is happening right now that I almost start living from tick to tick. I tend to forget the longer-term timeframe and the big picture. What I mean by this is that I get caught up looking at 1hr charts (or shorter) and forget about the daily and weekly charts.
Looking at the longer term timeframes can help you identify support and resistance levels, break-outs and the general trend. Looking at the longer term charts and bigger picture – as I like to call it – helps us do just that.
Another benefit of zooming out is being able to spot longer-term trades. For example a large symmetrical triangle break-out on Peregrine (PGR) taking place on the daily chart may not be as exciting as a short-term trade, because it is a trade that you might sit in for months as it slowly grinds its way towards the medium term formation target. It is a valid setup and opportunity though, so why let it slip by?
Everyone has their own style of trading, and many traders in the early stages of their careers think that they should be (and want to be) day traders. Many traders (including myself) have at some stage forced themselves into this category because that was what they thought was trading. We think that being a trader means that you have to trade all the time, and if you are not trading all the time you are not working. ‘Day Trader’ sounds like a respectable occupation.
But trading is not about working, trading is about making money and most importantly, letting your money do the work for you. Taking a trade in which you sit and do nothing for three months is doing just that.
So I encourage you to take a longer-term trade. Go through the charts in your trading universe and find a medium or long-term setup that will take months to work out, and take that trade. You might find that being in a longer-term trade helps settle you and makes you more comfortable. You might find it dreadfully boring. Who knows? You might even find it profitable.