This Day On The Street
Continue to site right-arrow
ADVERTISEMENT
This account is pending registration confirmation. Please click on the link within the confirmation email previously sent you to complete registration.
Need a new registration confirmation email? Click here
TheStreet Open House

Technical Trading Primer: What's Your Trading Timeframe?

Typically, day traders use technical trading strategies that take advantage of the market's behavior -- but unlike other strategies that allow for careful study of technical indicators and charts, successful day traders need significant "fluency" with the market.

Special subsets of day traders include scalpers and rebate traders, who earn money by taking advantage of market mechanics (or try to).

In day trading, your risk per trade is typically the least of the three, but compounding and margin make up for that. The difficulty of day trading, coupled with the risk of loss is one of the reasons why this timeframe has such a notoriously high failure rate (less than 20% of day traders actually make money).

Swing Trading Strategy

While some sources relegate the "swing trade" definition to those taking less than a week, today's swing traders fit within a bigger window: typically holding for more than a day on average but less than a month. For that strategy to hold weight, bigger gains are required to justify the longer holding periods.

Because swing trading results in bigger percentage moves than day trading, it can produce equally impressive losses. As in day trading, strict battle-tested trading rules are a hallmark of successful swing traders.

Learning Patience With Position Traders

Many people don't realize that technical traders can -- and often do -- operate using longer time frames. In the case of position traders, positions can be held for a year or more. As a result, this isn't a strategy that's recommended for anxious would-be traders. Position traders often don't know whether a trade is on track on not for quite a while.

The term "trend trading" is sometimes used interchangeably with position trading, but that's a bit of a misnomer. It comes from the fact that most position traders take advantage of long-term market trends, one of the principle tenets of technical analysis. In reality, trend traders can fall along any of the three major timeframes.

Which Strategy Makes Sense for You?

Even though a big deal is made on and off Wall Street about these three "trader types," in the real world successful practitioners of all three timeframes can produce uncannily similar gains. Which one works best for you is largely a function of which market timeframe you're most able to wrap your head around.

2 of 3

Check Out Our Best Services for Investors

Action Alerts PLUS

Jim Cramer and Stephanie Link reveal their investment tactics while giving advanced notice before every trade.

Product Features:
  • $2.5+ million portfolio
  • Large-cap and dividend focus
  • Intraday trade alerts from Cramer
Quant Ratings

Access the tool that DOMINATES the Russell 2000 and the S&P 500.

Product Features:
  • Buy, hold, or sell recommendations for over 4,300 stocks
  • Unlimited research reports on your favorite stocks
  • A custom stock screener
Stocks Under $10

Jim Cramer's protégé, David Peltier, uncovers low dollar stocks with extraordinary upside potential that are flying under Wall Street's radar.

Product Features:
  • Model portfolio
  • Stocks trading below $10
  • Intraday trade alerts
Try it NOW
Try it NOW
Try it NOW

Check Out Our Best Services for Investors

Dividend Stock Advisor

Jim Cramer's protégé, David Peltier, identifies the best of breed dividend stocks that will pay a reliable AND significant income stream.

Product Features:
  • Diversified model portfolio of dividend stocks
  • Updates with exact steps to take - BUY, HOLD, SELL
Trifecta Stocks

Every recommendation goes through 3 layers of intense scrutiny—quantitative, fundamental and technical analysis—to maximize profit potential and minimize risk.

Product Features:
  • Model Portfolio
  • Intra Day Trade alerts
  • Access to Quant Ratings
Options Profits

Our options trading pros provide over 100 monthly option trading ideas and strategies to help you become a well-seasoned trader.

Product Features:
  • Actionable options commentary and news
  • Real-time trading community
Try it NOW
Try it NOW
Try it NOW
To begin commenting right away, you can log in below using your Disqus, Facebook, Twitter, OpenID or Yahoo login credentials. Alternatively, you can post a comment as a "guest" just by entering an email address. Your use of the commenting tool is subject to multiple terms of service/use and privacy policies - see here for more details.
Submit an article to us!
DOW 16,677.90 +216.58 1.32%
S&P 500 1,950.82 +23.71 1.23%
NASDAQ 4,452.7920 +69.9450 1.60%

Brokerage Partners

Rates from Bankrate.com

  • Mortgage
  • Credit Cards
  • Auto

Free Newsletters from TheStreet

My Subscriptions:

After the Bell

Before the Bell

Booyah! Newsletter

Midday Bell

TheStreet Top 10 Stories

Winners & Losers

Register for Newsletters
Top Rated Stocks Top Rated Funds Top Rated ETFs