What is the best time frame for forex trading?admin 8 August 2021
what you read here:
- 1 Main forex trading time frames
- 2 Short-term trading time frames pros and cons
- 3 Long-term trading time frames pros and cons
- 4 Conclusion
- 5 FAQ
Many new traders ask the experienced ones or seek the answers online to find the best time frames for trading forex. But there is no specific answer to this question. Selecting the best time frame for trading depends on the traders’ strategies and personalities. There are many time frames in the market for traders. However, they are divided into long- and short-term-time frames. In the following, we talk about time frames in detail.
Main forex trading time frames
Traders use various strategies and they determine their time frames based on them. In addition, some of them are impatient, and they can use long-term time frames. In contrast, some traders may choose more extended time frames to achieve their goals. So, the personality of people also has a key role in determining the most suitable time frames. Here you can see the main forex trading time frames.
Position trading time frame
Depending on the strategy of traders, a position can last from one day to even one year, but it is usually considered a long-term time frame. Some traders avoid this approach because it may take them a long time to close a position with profit, and the exact time frame may not be easy to calculate.
However, some traders think short-term trading is not good enough based on their strategies. To use a position trading strategy, traders can use monthly charts to identify the trends and weekly charts to find the best entry points.
Swing trading time frame
As a trader, you may not be comfortable with either long-term or short-term time frames. The best option for you is using swing trading time frames. Swing trading is somewhere between long- and short-term-time frames. Traders can use the benefits of both long and short-term trading styles without facing their disadvantages by using swing trading time frames. That’s why swing trading is very popular.
Swing traders don’t need to sit on their chairs at look at the charts on monitors all day long. Instead, they look at the charts a few times a day to see if there is any significant movement in the market. They only act when they spot an opportunity.
Traders who use long-term time frames may lose lots of opportunities. Sweet traders check the charts often enough, so they don’t miss everything. Therefore, they have the best of both worlds.
Swing traders usually use daily charts to identify market trends, and the 4-hour charts two spot entry opportunities.
Day trading time frames
Day trading is one of the most challenging strategies to make a profit. Traders who use day trading must make numerous decisions every day to make several small profits. Novice day traders always encounter lots of problems. Lack of experience combined with constant decision making, which most of them are wrong, can have disastrous results. That’s why it is recommended that new traders use longer-term time frames for their activities.
Related Article: Liquidity in the Forex Market
Day traders need to find quick movements in the desired direction of the trades. That’s why they have to look at the charts constantly to find the right opportunities. This is a very tiresome, boring, and time-consuming process. Although traders’ profits with this method are not high, the losses are not high either. So, you can’t lose much money in a single trade in a short time. Experts usually recommend that new traders master long-term time frames before using strategies such as day trading. However, if you want to use short term timeframes, you can look at hourly charts to identify the trend and minute time frames to spot entry opportunities.
Short-term trading time frames pros and cons
- You have many opportunities to trade with each price change and you can use all of them.
- Your money will not be tied up for a long time.
- Most of forex trading signals are only suitable for short term trading.
- Traders who use short time frames can make small and frequent profits.
- Daily traders are psychologically more relaxed after closing their positions and they need to worry about anything overnight.
- Short term trading is very time consuming and challenging.
- It requires traders to be constantly concentrated in the working hours.
- When traders are tired, they can easily make mistakes and take wrong decisions.
Long-term trading time frames pros and cons
- Traders pay less fees and commissions to brokers.
- Long term traders don’t have to worry about daily or short-term market fluctuations.
- Long term trading is easier.
- Since long term traders take few decisions over a long period of time, their activities are not time-consuming.
- Traders have much more time to think and analyze a market before opening a position.
- Sometimes achieving profits can take several months.
- Traders need to be completely aware of political and economic news, because different international events can affect their positions.
As we said, there is no specific time frame that can be considered as the best. It all depends on your strategies and your personal traits. Now that you know the pros and cons of different time frames, you can select a suitable time frame for yourself. However, if you need to experience them to make a decision, our demo accounts are always available for you in DeltaFX.
❓ Is the capital size important when selecting a time frame for the trades?
✅ Yes. Short term trades can be done with a small capital and taking the advantage of leverages. However, the long-term traders must provide a lot of capital to cover the fluctuations and sustain the open positions for a long time.