The forex market is one of the best financial markets, with a lot of people now getting involved.
However, most traders don’t place much attention on the timeframes they intend to trade or even the time intended to hold a position.
As much as they set the stop loss as well as profit order levels, they may not have a particular time frame for closing out their position.
So, precisely, what’s a timeframe? It’s merely a way of grouping the prices to display them on the chart in a more convenient manner.
It’s used to construct the indicators of the candlestick, linear as well as other technical analysis types.
The Main Forex Timeframes
Forex timeframes are classified as long-term, medium-term, and short-term. As a trader, you can incorporate all of them, or simply use one longer and then one shorter time frame to analyze potential trades.
Long-term timeframes can be beneficial in identifying a trade set up, and the short-term frames useful in timing entries.
The list of time frames in forex is:
- Daily charts
They all represent the amount of time taken on each chart for a candle (bar) to be drawn. So, what time frame should you trade?
Experienced traders can be comfortable with any time frame as they can choose short periods and long-term trade.
What about Beginners?
Novice traders would be wondering whether one timeframe is better than the other. Fundamentally, in choosing the best timeframe in trading, forex depends significantly on the trading style as well as strategies used by the trader.
In choosing the best timeframe, ensure you consider your trading style and the trading strategy that you’ll follow.
Choose a technical analysis chart you feel comfortable with, and implement risk management on all the trades.
Apparently, before doing anything, ensure that you take your time to observe the market on various timeframes. Pick a currency pair and then watch it across several timeframes and notice the various patterns it makes.
On the lower timeframes, the currency pairs tend to be choppier and more volatile, while on higher timeframes, the choppiness is eliminated.
Moreover, you’ll also be able to visualize a timeframe on top of another.
All the timeframes are present in a popular trading terminal, Meta Trader4 (MT4). Basically, the time frame label shows the amount of time a single candle refers to.
If a trader chooses a tremendous timeframe, the time interval would be more substantial as well in a candle on the chart.
Some traders can look at a single timeframe and then trade it alone. However, for others, they can look at numerous timeframes but only to place a trade on one timeframe.
Perhaps, trading the daily chart would be the best strategy, but planning the trade by the use of the hourly chart.
That strategy helps you to see all the details of the happenings during the day and create a daily formation to trade off of.
Considering several timeframes creates context, and depending on the conditions on the hourly chart, it’s solely your decision to trade or not trade the daily formation.
If the market is in a specific weekly trend, you have to think again before trading against it on the daily chart.
Therefore, as a novice trader, it would be appropriate that you start trading on slower timeframes as it offers a less choppy trading environment as well as more time for correcting mistakes.
The Bottom Line
The type of strategy chosen for trading greatly influence the forex timeframes you can select.
Alternatively, instead of selecting one timeframe to trade, you can opt for multiple timeframe analysis, which is viewing a currency pair under various timeframes.
Therefore, as a beginner, try and start by trading the daily charts to help you have days or even weeks to remedy the problems as well as work towards profitability.