Which trading timeframe is best? As a new forex trader in the Foreign exchange market, there’s a bit of a learning curve on which is best. A new Forex trader can become frustrated and try different timeframes until they eventually lose a significant portion of the trading capital.
If you want to make a big profit, you should have the skills to find your desired time span. But this is not all easy. Even if you learn to analyze the multiple timeframes, the chances are very high, that you will not be able to find your preferred timeframe to maximize the profit.
There are a few essential tips you must learn while analyzing the different time intervals. We will highlight the importance of some significant timeframes. After reading this article, you will know which timeframe you should trade.
In This Article
A 30-minute timeframe is mostly used by the professional scalpers and short timeframe traders. With the help of a 30-minute time span, you can even trade significant market news. Look for the price action signals in this time span and place the trade in favor of the fundamental trading news.
But trading the 30-minute timeframe has one major drawback. You won’t be able to find a high risk to reward trade setups in the market. Unless you have a high success rate, you should not place the trade based on the 30-minute timeframe.
It would be best if you traded the 1-hour timeframe when you try to develop an intraday Forex trading plan. It will allow you to trade the market with at least a 1:2 risk to reward ratio. But make sure you trade in favor of the long term trend or else it will be tough to make a profit from this market.
Naïve traders always think they know the details of the trading business. But if this were true, they would have never blown up the trading account. You have to find a safe way to trade the major timeframe, or else it will be tough to make a profit.
The 4-hour timeframe works like a chart when you look for the reliable price action signals. No matter which trading strategy you use, you can easily make a decent profit using the 4-hour time interval trading signals.
But holding to your patience become hard since the reliable candlestick pattern rarely forms in favor of the trend. Trading the reversal is a very risky business, and for this reason, you should trade with the major trend. If required, learn to use the 4-hour timeframe in the demo account, and eventually, you will become better at trading.
A daily timeframe is the most efficient way to earn money at trading. If you want to trade safely, you should learn to trade the daily timeframe. Never think you are the king when you start trading the daily time frame. Even the pro traders have to lose money at trading.
Stick to the traditional rules of risk management so that you don’t have to lose a big portion of your trading capital in the learning stage. Once you get better at trading, you will realize why skilled traders prefer the daily time interval.
Some of the advanced traders often use the daily timeframe to trade the major reversal. But if you trade the major reversal, make sure you are not taking too much risk in any single trade.
Stick to the safe method of trading. Try to look for a reliable candlestick pattern so that you can make a big profit without losing too much money. At times, you might lose a few trades in a row, but this is normal. Take a short break and start trading with a fresh mindset.
The weekly timeframe is most for the position traders. If you want to make a big profit from each trade, you must trade the weekly interval. But analyzing the weekly timeframe data is incredibly dull since you have to wait a long time to get one good trade setup. But never forget patience has its reward.
If you manage to learn the art of the weekly time span trading method, you can make some big profit without risking too much in each trade. Some of the retail traders often say, trading the weekly timeframe requires enormous investment.
Though it’s true to a certain extent, with the help of leverage, you can also trade with a small amount of money.
Trading with leverage requires special skills. You have to learn to manage the risk exposure by using the advanced risk management policy. If you think you are the best traders and by risking 2% in each trade, you can protect your capital, you are making a big mistake. You have to bring variation in your risk exposure when you deal with the weekly timeframe.
The monthly timeframe is mostly used to identify the major trend. Those who are having trouble in finding the direction of the major trend can analyze the monthly time interval data. But never place the trade based on the price action signals formed in the monthly chart since you have to use very wide stops. Try to use the monthly timeframe as a trend identifier. And use the lower time span to find your key trading spot.
Final Thoughts on Forex Trading Timeframes
Any time you trade you need to be aware of the risk, no matter what time span you trade on. Understanding ou own risk tolerance is key to being successful. Good luck!
Brian is a Dad, husband, and an IT professional by trade. A Personal Finance Blogger since 2013. Who, with his family, has successfully paid off over $100K worth of consumer debt. Now that Brian is debt-free, his mission is to help his three children prepare for their financial lives and educate others to achieved financial success. Brian is involved in his local community. As a Financial Committee Chair with the Board of Education of his local school district, he has helped successfully launch a K-12 financial literacy program in a six thousand student district.