An important key to trading successfully is to only trade the timeframes that will yield the greatest success for the least amount of time. Any of us can trade, or attempt to trade, every waking moment the markets are open. In the case of the Forex you’ll need a lot of coffee and the ability to get by on no sleep. With the stock market or futures you’ll need amazing endurance especially when the markets get sleepy. This is primarily if you actively day trade or swing trade intraday.

Of course, if you are trading off daily charts you might be able to get by with far less effort – a reason that many choose to swing trade rather than day trade - but realize you are also going to be able to “turn” your funds less often, and when swing trading you have to balance the fact that the time between your losing trade and next winning trade is going to be longer. In day trading you might take a loss and then 5 minutes later wipe that feeling away by trading profitably. If you are trading off of daily charts, or even longer weekly charts, you might go a few weeks before you even get another set-up.

This is a primary difference and one you have to keep in mind. Day trading is typically more challenging – both in the workload and the frequency. However, you have the advantage of each trade basically being less important. And you can quickly wipe a bad experience away since another set-up is probably literally developing at that time.

Swing traders have an easier life when it comes to waiting on the set-ups and taking trades, but realize that if you take a few losers in a row, that could be over several weeks and you have to do a better job with the mind games and trading psychology because it could be just two or three losers but the longer time element could wear on you.

So, how do you find what to trade and what timeframe?

We feel it’s actually best to find a mix that works for you. If you can trade using a specific method that will work in both day trading and swing trading it gives you amazing flexibility. You’ll be able to master one trading approach and then apply it in the timeframes that make most sense for you in your current lifestyle.

Suppose you like to do a lot of day trading but are about to embark on vacation or begin an import project at work. Wouldn’t it be ideal if you could slide into some swing trading to keep your capital at work but without having to do anything intraday? Then, when your schedule returns to normal or you have some hours available one morning, you can mix the day trading back in. Certainly you could focus on one or the other but we’ve found the most successful traders are those that have been able to use one unifying strategy, customize it for the markets they choose to trade and have the flexibility to choose the timeframes that fit their current schedule. Remember, you are supposed to be running your trading plan; it is not supposed to be running you.

What about time commitment?

There is this overreaching human condition that makes us believe that we have to work huge hours to feel like we accomplished something. You need to break that habit, and break it fast. When it comes to trading it is not a measure of success if you put in eight hours today trading, or if you obsessed for three hours in the evening over your next day’s swing trades. You should approach your trading plan with the eye on putting forth the least amount of effort for the return. If you put in too much time and effort, forgetting the stress and strain, you’ll simply be left with a lower return for the efforts. Those of you who instead focus on key timeframes and have a specific strategy know that they will sit down for x amount of time, follow that plan and be done. Time to move on.

This is why we termed an important part of our money and trading management “The Power of Quitting.”

Typically in trading you do not want to use anything negative – and quitting certainly sounds negative. However, we have found that this is one of the most important factors between success and failure. In our day trading, we have come up with a plan that we follow, and we use this Power of Quitting concept and personally have set it at “two wins” – this means when we reach two wins in a trading day and are profitable we quit. We’re done. We even have markets where we call it after one win. The caveat is we keep going if we are negative. We want to give ourselves a way to dig out if the first few trades aren’t as cooperative. There are those who have added a losing side to this as well; they might trade the two win strategy but add in two losses as well – or three, etc… If they hit that, it is like a circuit breaker for the day to stop. We’ve found that for the most part, if we are using a strategy that has put the odds in our favor when we take every trade, that we can just focus on the Power of Quitting on the win side. For us, that works since we know when a trade is taken, the odds favor us it will succeed. That does not mean for a moment that we feel every trade is a lock for profits. Absolutely not.

You have to accept, right away, that trading is a game of odds. Not everyone likes to hear that because that might imply gambling but let’s call it an educated gamble. It is a gamble because as much as you want to believe that all of your chart and fundamental analysis has figured out the market or stock or commodity you are trading, the simple truth is that we are trading from within a glass booth, nobody can hear us, and we have absolutely no influence on what happens in the markets, none at all. It would be like going to a sporting event where you yell and scream for your favorite team, but you are sitting in the glassed-in luxury box. You can yell all you want at the glass and television but nothing you do will influence what happens on the floor one bit. Same goes for trading.

We always accept the fact that we should trade in a way that we stack the deck as much in our favor as possible, take the trade to the plan, then after that it isn’t up to us any longer. We know when we do this right, the odds are favoring us, and even if it doesn’t work out one time, two times, three times or more, that it will eventually work out, and over any longer stretch of trades, we know we’ll be fine.

Yes, it’s never easy when you are going through those inevitable negative streaks. And on paper when you see results and see small losing streaks you always tell yourself that you’d have no problem with that. Once you go live though? Another story. Suddenly that losing streak of four trades is unbearable. You do what many do: you radically change your strategy, you blame the markets, the strategy, the indicators, maybe yourself (though unlikely) and the dog. Then you make the even grander mistake of trying to chase performance with something else.

When you do that, that’s exactly when the strategy you just left wins eight out of nine trades and is way ahead over the longer stretch of trades. You started trading a strategy you weren’t familiar with, made mistakes and caught a losing stretch with that strategy. Now you have just amplified a problem and made it worse – the spiral starts and the account wipe out is well on its way. Don’t think this will happen to you? If you have traded for any length of time you have followed this cycle. We’ve done the exact same thing. It is in some ways a rite of passage for most successful traders. If you have not gone down this road you either have amazing discipline, or you have just started trading. In either case, if you can avoid succumbing to this emotion you’ll take years off your success plan.