The importance of organizing your trading strategy and sticking to it.

From my experience i guess i can generally classify trading strategy into 2 main categories, either your strategy is designed to take short trades or swing trade (position trading).
Short trades or scalping is usually done in the lower time-frames, and with tight stop loss levels e.g. 15,20 or 30 pips or so as oppose to swing trades which generally have wider stop loss level and normally executed in the higher time-frames and are held for a longer period of time which might range from a few hours to a few days or weeks. For those who are just starting out in trading i would strongly recommend you guys to try out both strategy and see which of these best suites your characteristics and lifestyle. of course there will be a vast difference in these 2 trading style.

For scalping one must have enough time to monitor the market from time to time in the lower time frame to spot trading opportunities and this strategy will usually yield more trades and thus is also more prone to having losing trades as well. One must also be prepared to withstand the stress of monitoring price movements and cutting losses fast when scalping. If a trader wishes to adopt this strategy in trading, they must be psychologically prepared also to face more losing trades. Imagine if your chosen scalping strategy yields a winning ratio of 70% then it can be assumed that you can have 20-30 trades in a day, so it might be fair to say that you will need to face around 7-10 losing trades in a typical trading day. or you might also face a series of losing trades before making any profitable trade in a day. All these will definitely add burden to ones psychology if we are not prepared to face it.

As oppose to scalping, swing trading does not yield as many trades compared to scalping. This strategy normally uses the higher time-frames i.e. the Hourly chart and beyond. So one will expect to find less signals generated and ALOT of patience is needed to wait for the right opportunity but this strategy will not require the trader to continuously monitor price movements minute by minute. instead they can monitor the price action in an hourly interval or 4 hourly interval depending on which time frame the trades are being taken. and of course, in this strategy one must also expect to hold trades for longer, sometimes a trade might not be in profit for hours or days, and also to refrain from taking premature profits. Patience is the key here in swing trading.

To sum it all up, a stop loss level in a swing trade cannot be confused with a stop loss level in a scalp trade. in other words, if your stop loss level is at the recent swing high in the 4 hourly charts, your scalp trades must not adopt the same stop loss level as the swing trade which tend to have a wider stop loss level, if these happens the law of large numbers will not apply and we will end up with negative growth in our trading account since your loss will inevitably be larger than your profits in a scalping strategy. I would suggest opening a separate account for these 2 strategy to monitor your progress. lastly, its very IMPORTANT to stick to your rules of taking losses as well as taking profit. LOSSES must not be taken too slow and have it make a dent in your account and PROFITS must not be taken too prematurely leaving too much money on the table. For every trade, make an effort to measure the RISK & REWARD ratio before jumping in (applies to scalping and position trading) no matter how tempting the trade might be if it does not yield an RR of ATLEAST 1:1 then just SKIP it! haha sounds like talking abt learning to say no to temptations huh? (i would go into how to identify RR in my next article in Research and tactics, do stay tuned!) if you have done your homework of waiting for the right signals with good RR then just sit tight until one of those levels hit, and repeat this process(that's the hardest part in trading to stick to your rules).

well, i hope this article would do some good to you guys out there. Trade safely and follow your rules no matter what, and you would be successful in this business. Stay tuned n happy trading !