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Abstract:A general rule is that the longer the time frame, the more reliable the signals being given. As you drill down in time frames, the charts become more polluted. Well, just consider it like everything in life, it all depends on you to choose the best time frame for your trading.
A general rule is that the longer the time frame, the more reliable the signals being given. As you drill down in time frames, the charts become more polluted. Well, just consider it like everything in life, it all depends on you to choose the best time frame for your trading.
If you like to take things slowly, and take your time on each trade? Then Maybe youre suited for trading longer time frames.
Or maybe you like the excitement, quick, fast-paced action? Then here you should take a look at the 5-min charts hopefully will suit your trading style.
Let's loot at the table below, where weve highlighted some of the basic time frames and the differences between each.
TIME FRAME | DESCRIPTION | ADVANTAGE | DISADVANTAGES |
---|---|---|---|
LONG-TERM | Long-term traders will usually refer to daily and weekly charts.The weekly charts will establish a longer-term perspective and assist in placing entries in the shorter term daily.Trades usually from a few weeks to many months, sometimes years. | Dont have to watch the markets intraday.Fewer transactions mean fewer times to pay the spread.More time to think through each trade. | Large swingsUsually 1 or 2 two goods a year so PATIENCE is required.Bigger account needed to ride longer-term swingsFrequent losing months. |
SHORT-TERM (SWING) | Short-term traders use hourly time frames and hold trades for several hours to a week. | More opportunities for trades.Less chance of losing months.Less reliance on one or two trades a year to make money. | Transaction costs will be higher (more spreads to pay).Overnight risk becomes a factor. |
INTRADAY | Intraday traders use minute charts such as 1-minute or 15-minute.Trades are held intraday and exited by market close. | Lots of trading opportunities.Less chance of losing months overnight risk. | Transaction costs will be much higher (more spreads to pay).Mentally more difficult due to the need to change biases frequently.Profits are limited by needing to exit at the end of the day. |
It is important to always consider the amount of capital you have to trade. Shorter time frames allow you to make better use of margin and have tighter stop losses.
Note that Larger time frames require bigger stops, thus a bigger account, so you can handle the market swings without facing a margin call.
The most important thing to remember is that whatever time frame you choose to trade, it should naturally fit your trading style.
The more you fell unbearable like having your trouser teared in public while no undies inside, then maybe its just not the right fit. And which is why we suggest demo trading on several time frames for a while to find your comfort zone. This will help you determine the best fit for you to make the best trading decisions you can in terms of time frame selection
By the time you finally decide on your preferred time frame, thats when the fun begins, This is when you start looking at multiple time frames to help you analyze the market because you got the basics.
Disclaimer:
The views in this article only represent the author's personal views, and do not constitute investment advice on this platform. This platform does not guarantee the accuracy, completeness and timeliness of the information in the article, and will not be liable for any loss caused by the use of or reliance on the information in the article.
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