How to choose the best timeframe for successful trading


Looking at the panel with the functionality of the terminal, a trader with little experience becomes somewhat confused by the number of timeframes – M1, M5, M15, M30, H1, H4, D1, W1 and MN. Even greater confusion appears when moving from one period to another. The charts look completely different, although they seem to refer to the same trading instrument. Let’s try together to deal with this very serious issue for every trader.

Choosing a timeframe for successful trading

Any experienced trader will say with confidence that the choice of timeframe is extremely important for successful trading in the financial markets. After reading this article, you will not only see this, but also learn how to choose the most optimal timeframe for yourself.

It is important to understand that even the right choice of timeframe is not a panacea that should immediately bring a lot of profit or completely protect the trader from risks. This is just one of the components of stable and profitable trading – nothing more. Meanwhile, a mistake in choosing a timeframe can lead to fatal consequences. So, let’s start to understand, but first a little theory.

What are the timeframes?

First of all, let’s define the term timeframe itself. If translated from English, the word “timeframe” is a period of time. Considering the timeframe in trading, we understand the period during which the quotes of a trading instrument are grouped, all elements of the price chart are lined up (bars, Japanese candlesticks, etc.). For example, if you select the H1 timeframe in the MT4 terminal, then each bar or Japanese candle (depending on the choice of display) will correspond to the price movement within 1 hour. In trading, timeframes can be divided into two groups: short or short-term, as well as long, they are also long-term.

  • Short term timeframes:

– M1, M15, M15, M30 – minute; – H1, H4 – sentries.

  • Long term timeframes:

– D1 – day; – W1 – weekly; – MN – monthly.

Having mastered the theory, you will most likely ask the following question – what is the best timeframe to trade on? What timeframe to choose – weekly or minute? Let us consider in detail both short and long trading periods.

Where will short timeframes fit?

In general, the choice of timeframe directly depends on the trading strategy that the trader uses. The main advantage of short timeframes is the high sensitivity of quotes to ongoing events. It is for this reason that they are used to find the most effective entry and exit points in the market. In this case, short timeframes can be used in conjunction with long-term ones. Again, it all depends on the trading strategy.

Short timeframes are good for pipsers and day traders. The former almost always use the period M1, sometimes M5. The second ones use M15, M30, sometimes hourly periods. We will not dwell on pipsing in detail, this is a very risky trading style. In addition, it requires constant monitoring of the market. An experienced pipser can sit at the computer for hours trying to catch the most interesting entry points on different instruments in order to earn his 2-3 pips of profit per trade.

Traders with little trading experience, when choosing a timeframe, need to adhere to the principle of “highest to lowest”. That is why, in our opinion, day trading is the most interesting. With it, the trader determines the general market trend for the older timeframe (H4 or D1), and selects the entry and exit points for the transaction for the younger period (M15 or M30). The transaction is concluded with the expectation that it will close during the trading day and bring profit. Opening deals, as well as fixing profits, can be done manually, as well as using pending orders and TP / SL orders.

In what case is it worth trading on long timeframes?

Long-term timeframes are used by traders who use medium-term and long-term trading strategies. Transactions are opened for a period of several weeks to several months and even years. Basically, the forecast is built using fundamental analysis, and then refined on long timeframes. There is no need to search for the most accurate position to enter the market with such strategies. Trades are opened on charts with a period of D1 and above.

The use of long-term strategies and long timeframes is recommended for those investors who do not have a lot of free time. After all, trading on short timeframes requires constant market analysis, which takes a lot of time. In addition, long-term traders work with large deposits, which allows them to minimize risks while earning tangible profits.

Scalping - playing on very short timeframes

Scalping is one of the “jewelry” trading strategies. Despite the fact that it is practiced mainly by very experienced traders, I would like to mention it in the article. Its principle is that a trader predicts the future trend of the market using higher timeframes, and uses younger ones for a very accurate entry into the market.

The task is to take profit at the very top of the candle (“cut the scalp”), closing the deal just before the price reversal. Agree, jewelry accuracy. Important! Do not confuse scalping with pipsing, they are completely different strategies. When scalping, a trader can take 10, 20 or more points from the market. At the same time, trading can be conducted on higher timeframes than M1 or M5.

Returning to our main question, which timeframe to choose for successful trading, we can summarize the following. First of all, you need to decide what trading strategy you plan to use, how much time you are willing to devote to trading, what kind of deposit you have and what risks you are willing to bear. Having decided on these points, you yourself will be able to answer it, because. the answer will be obvious.

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