- In most cases you will find a better win/loss ratio as well as risk vs. reward through swing trading. Partially because using higher time frame charts for your analysis causes you to take less trades than a day trader who uses the lower time frames and takes more trades. A big one for me is more freedom and less screen time which generates more family time/fishing time. As a swing trader you will experience less of a psychological roller coaster ride than day traders who have to contend with the daily bounces against and through smaller time frame zones.
- If you crave action and like to trade a bunch of contracts at 1:1 or even 3:1 in order to generate daily or weekly revenue, swing trading may frustrate you. It requires more patience and you sometimes have to wait weeks (or months) for your zones to be hit, and your orders filled. Sometimes price does not fall away from your zone right away and you have to sit there for a day or two with price in your zone bouncing around (I hate that).
- Even though visually zones may look the same to you when you switch from the 5M to 4hr chart, or 30M to Daily. They are very different, check the volume ratios using the PFA software, and measure the risk to reward. In addition, go back in time on a higher time frame chart and track how price reacts to zones you id. Next going back for a few weeks on a smaller time frame chart and track the reaction to zones you id on that time frame. It will be an eyeopener for you if you have not already performed a similar test.
- You will also notice that they (larger time frame zones) are usually market turning points, and (if you chose the right ones) not internal zones. The smaller time frame charts show internal zones as active and make them visually look stronger than they really are, unless you use the higher time frame chart for perspective when considering them. Experienced traders call these small time frame supply and demand zones that are internal by nature "noise."
TRADE EXAMPLES: (These are not trade recommendations, just some general areas I am interested in. Please evaluate them with your own rules, strategy and risk parameters).
SWING: There is a clear demand zone on the CL contract around the 59.44 area, if prices pulls back to that in the future. That's a swing trade by my rules, its with the high time frame trend, and I will look to get long somewhere in there. When price gets closer I will plan my exact entry, stop and targets on the 30M chart. May not get there anytime soon but if it does I am ready.
DAY: I may take some shorter term day trades long in the 63.00 area, depending on a tighter set of rules because that demand area is not as good and is a retest of an older area (not fresh). I may also apply an even tighter set of rules and take some counter trend day trades short potentially around the 72.00 area depending on what the approach looked like and how close the demand zone below it formed (that would ultimately determine my risk vs. reward)
NOTE: When I say "tighter set of rules" I am talking about my own written rules and and trade plan that considers things like: risk vs reward (distance to opposing significant supply or demand and distance to stop loss from entry), freshness of the zone itself, the daily trend as well as the higher time frame trend (just to name a few). I also score and qualify each trade in my trade journal before entry. That way I can pass or fail each decision in a repeatable, non-emotional, and analytical way. It also helps me to go back and learn from my mistakes when I make them (and I do).
Sorry if it was wordy, and hope it helped. Bless you all, and best of luck B