By Yael Warman

There are many different beliefs about how often to trade. Some believe that trading is like breathing, i.e. you need to do it all the time to sustain life. Others feel that it’s like eating, three times a day, and with some light snacking in between. And some treat it like a married couple’s sex schedule, something reserved only for special and rare occasions.

Ultimately, the frequency depends on what you are doing and what works best for you. You just can’t eat as often as you can breathe. In trading terms, your frequency depends on your trading plan, your style, strategy, objectives and other factors. A long term fundamental trader cannot simply shoot off trades every day in the way that a short term can. It is simply not compatible with the strategy.

The following elements of your trading plan should impact the frequency of trades either directly or conceptually.

Trading outcomes / goals and risk tolerance

The needs of your trading will drive your level of risk and in some ways impact your frequency of trading. When you enquire a bit, the primary reason emerges. “I want to be able to quit my job”, “I want to put my kid through college”, “I want to be a trader full time” are all common reasons and each come with different time expectations and risk needs.

Trading style / technique

With your risk levels and objectives taken care of, it is time to move to the ‘how to implement’ stage. The main driver of frequency is the setup which determines how you open your trade. How often your entry scenario is triggered will determine how often it is feasible to trade.

Two examples will highlight this element.

1. Buy and hold – This is simple in terms of frequency, as it usually requires a longer term trend. Longer term trends combined with the desire to hold means that it takes a while for a trend to emerge, often over the course of a few days. A daily trade may not be in order, but daily checking on potential trends are warranted.

2. Short term trading – Short term trading covers a variety of different types of trading. A volatility trader will often find good frequent activity to trade whenever they choose. A swing trader is also likely to be trading multiple times a day, depending on the amount of pairs followed.

However, even as a short term trader this may not be the case. If your setup includes using a longer timeframe chart setup to be executed when the chart touches the Bollinger bands, you are not likely to find yourself trading daily. So it is the frequency of the likely execution that will determine how often it is feasible to trade.

Trading frequency is not just about execution, it is also about monitoring the market. Whilst it is obvious that there are systems which will not allow for frequent trading, and ones which will, many systems will require monitoring of the market frequently to keep an eye out for potential trades. The best example of this is volatility trading, which can involve a bit of waiting on news, rebounds, etc. While trading is most effectively done in an environment that allows for full concentration, this can be a challenging aspect for someone with other commitments. The lifestyle of the trader should be taken into account when determining the strategy and style to ensure that the trading environment is optimal for trading.

The underlying thread is that trading frequency is dependent on a realization that proper trading must be in line with a trading plan to be successful. Trading without a strategy is going to be unsuccessful long term. Therefore making sure your plan fits your lifestyle and strategy is the key to success.

About the Author:

Yael Warman is a creative writer with a strong background in marketing and advertising. Yael has been a writer for over 10 years and has worked for clients in various industries as well as her own companies and is currently the Content Manager at Leverate.