The learning process of technical analysis is not easy, as it requires constant practice, learning, and the development of fresh perspectives.
A trading perspective should be to perform the best in the market. It takes a lot of thinking and learning to prepare the mindset of an individual for trading.
Having a trading viewpoint to think, build skills, and trade with work ethics is crucial whether you are a day trader, swing trader, positional trader, or scalp trader.
A trading mindset can shift when you are trading in different timeframes. Therefore, we will ensure that you learn all the timeframes with the trading perspectives required to trade in the stock market.
A trader should never stop learning to develop a proper trading mindset or perspective. The stock market is an ongoing phenomenon where the traders will come and go, but the view will always stay the same. Thus, build the proper perspective from the start to have your losses under control and aim to generate higher profits.
Most stock market players develop the wrong perspective of having luck in their trading, and based on good luck or bad luck; they trade in the markets. Trading luck is estimated by individuals lacking a knowledge base and the proper trading perspective.
We are saying that your mind matters in making money through trading; therefore, why not make it strong and accurate towards taking the right trade?
The art of trading comes from experience, so you need accurate thinking to implement while trading. You can develop the right mindset to trade in the Indian stock markets from the following tips.
2.1 Welz's Approach
Norman Welz explains individuals' fear and extreme thoughts through the Welz approach. This approach works for traders to process information through their subconscious in their daily routines.
Welz's theory helped people to overcome the fears and blockage of people's minds by teaching about 'trading discipline.' This approach integrates market knowledge, the confidence of the suitable investment with positive mental capabilities.
Trading Psychology by Norman Welz enables traders to modify their behavior towards trading by achieving a consistent trading practice.
2.2 Mindful Trading Practice
Mindfulness means to be in the moment, which signifies that a trader should make better decisions by being in the moment of buying or selling trades.
Practicing mindfulness can help traders achieve a greater perspective on trading. Calm your mind and control your emotions while being mindful about trading. Mindfulness, like meditation, improves your ability to be in the moment, which also enhances your trading discipline.
2.3 Develop and Follow Trading Plan
Successful trading takes place when there is a plan prepared before trading. Therefore, it is advised to develop a trading plan before the day of trading. Make sure to prepare mentally, set risk levels, and analyze the technical aspect of the market.
A trading plan outlines how a trader will take the trades on the next market day. Several rules are outlined, based on which the trader should find and execute trades. Thus, it is crucial to develop and follow the trading plan.
2.4 Prepare a Trading Journal
Input your trades in the journal, diary, or a log to improve your trading performance over the years. A trading journal assists in recording the trades that you are carrying out daily.
Traders learn about their mistakes and strong points by looking at the data from their trading journals. Thus, you should maintain a trading diary or journal to reflect on your previous trades, mistakes, or successes of trades.
2.5 Accept the Uncertainties of Trading
If you want to become a trader with the right mindset, you also need to accept the uncertainties of trading. Perspective to deal with uncertainty can help you cope faster than the usual mindset.
Admit it already that you are going to make losses to reach profits. Trading is anonymous with the risk it brings to the traders. Acceptance can develop resilience, clear thinking, and composure during trading.
A timeframe in trading is monitoring security in different frequencies or times of charts. There are time-period available for a few minutes, a few hours, days to weeks, and from weeks to years.
A trading timeframe is selected differently based on swing, intraday, and positional trading. Traders use short-term and long-term timeframes to identify their ideal entry points for trading. A time frame also depends upon having a trading perspective towards the security.
A trader can select the required time frame by analyzing what kind of trading they will perform.
Many traders say the hourly timeframe is best, whereas some say the weekly timeframe is best. However, we suggest you select a timeframe that matches the type of trading you do in the stock market.
Scalping is a trading style that helps traders generate profit in small price changes. While trading as a scalp trader, adhering to strict entry and exit prices is important. Scalping trading example is to enter and exit within the time range selected.
The timeframes selected for scalping are 1-minute, 2-minute, and 5-minutes maximum. Mostly, scalpers use 1-minute time frames to trade in expectations to generate profits in a short period.
A trader engages in intraday trading when they buy and sell shares on the same business day. Day trading is another name for it. The best time frame for intra-day trading in the stock market, per experts, is the shorter timeframe.
Intraday traders use intraday trading charts of 5-minutes, 15-minutes or 30-minutes, and 60-minutes charts. There are lots of trading opportunities that are present for traders with intraday trading.
It is always suggested to use higher time frames, such as 'daily' charts, to understand the market's trend. For example, some of the standard timeframes used by intra-day trades are 15-minute and 30-minutes chart.
Swing trading meaning that you buy stocks and hold them for a number of weeks or months as you wait for a profit to materialize. Swing traders are relaxed compared to day traders because they don't have the responsibility to trade daily in the stock market.
The timeframes that swing traders commonly use are the 'hourly' and 'daily' charts. For swing trading, you don't have to perform technical analysis throughout the day but take a position per the trend's direction.
It is important to stick to your watchlist to conduct swing trading hourly and daily. Gaining experience in swing trading and analyzing the time frame can help hold positions longer.
Positional trading is when a trader buys and holds stocks for several months to years to generate profits. Usually, positional traders gain the confidence to trade by watching daily, weekly and monthly charts.
Once you understand the use of time charts and the type of trading you do to secure profits, selecting the type of chart you want to use is easier. Longer timeframes are useful for positional traders that hold stocks from weeks to years.
Weekly charts are helpful for positional traders that are looking for long-term opportunities because they can be used to identify the price trends of buy and sell signals.
Points to Consider while selecting a Timeframe
Some of the points you need to consider when selecting a time frame are as follows:
The longer the time frame, the more reliability is ensured for the stock.
Analyze the strengths and weaknesses of each timeframe to choose the right one for your strategy.
With different strategies and goals, the timeframes will be different as well.
Professional traders can select even a second timeframe, but it is recommended for newbie traders to choose longer or hourly timeframes.
Through this blog, we hope that you understand how important it is to keep a positive trading perspective during trading. Moreover, trading with timeframes ensures a steady profit if used cautiously with the type of trades in the stock market.
Keep a trading perspective that helps you grow and learn in the stock market. Understanding the timeframes and perspectives can assist you in becoming a well-nourished trader with time.
Develop the right mindset with 5 approaches
Welz's approach to implementing correct behavior
Be mindful while trading in the markets
Always keep a trading journal to mark your profits and losses
Prepare a trading plan before the day of trading
Understand that losses are part of the stock market
Use a 1-minute chart for scalp trading
Use a 5–60-minute chart for intra-day trading
Use hourly and daily charts for swing trading
Use daily, weekly and monthly charts for positional trading