Ah, the age-old question — what time frame is best for trading Forex? If only it were enough to give you one answer and be done with the debate. You see, every trader is different. Every one of us has different personalities and therefore different needs as human beings.
I can also share with you what works best for the price action strategies that I teach. There are nine different standard time frames available to you. So even with just the standard time frames, you have a plethora of options to choose from. Nor do I recommend using variations such as the ones listed above. Forget about everything I just said about modifying time frames in MetaTrader.
In fact, it will only hurt your chances of becoming profitable in my opinion. For example, if enough traders are watching the same key level combined with the same bullish price action, chances are that market will rise as those traders begin to buy. When you start to deviate from the most-watched time frames you start to isolate yourself from the rest of the trading world. Both markets have the same number of total participants. Which pin bar do you think is more likely to succeed?
It goes without saying that the range high and low of each period on the daily chart is greater than each period on a 5 minute chart. What may not be so obvious is that this acts as a natural news filter.
How does it do this? The easiest way to explain it is to observe two different moving averages. One shorter period and one longer period. Notice how much smoother the period MA is? Which time frame do you think is more likely to hit your stop loss, the 5 minute or daily? This causes your stop loss on a 5-minute chart to be much more vulnerable during Forex news events than it would be on a daily chart. As a general rule, the higher time frames are much smoother and consistent than the lower time frames.
Why do they do this? Not only that, but levels on the higher time frames carry more weight than those on the lower time frames. An example would be a key level that goes back 3 years on the daily chart vs a level that goes back 48 hours on the 5-minute chart. Key levels of support and resistance on the higher time frames are generally more reliable than those found on the lower time frames. The higher time frames generally provide better quality setups than the lower time frames.
This is due to the fact that there are fewer setups on the higher time frames. This is because it stands out and becomes obvious to more traders around the world. The less you trade, the more you open yourself up to opportunities.
In order to see valid trade setups, your mind has to be in a neutral place. This open and neutral mindset can only come with trading less frequently.
I can recall from my own experience that going from the 15 and minute chart to the daily chart seemed crazy at first. I was also nervous and skeptical about the massive stop loss I was going to need to do it.
If you have enough money to open a trading account then you have enough to trade the higher time frames. But you can trade the higher time frames and work your way up.
Only if making money bores you. Is it just for the thrill and excitement? Or is it to make money? Most Forex traders I know are in it because they have dreams to one day trade full-time.
But please only do so from a demo account. Well, it all starts with what you want out of life. Please log in again. The login page will open in a new window. After logging in you can close it and return to this page. Acts as a Natural News Filter It goes without saying that the range high and low of each period on the daily chart is greater than each period on a 5 minute chart.
Trading the Higher Time Frames is Boring. Why are you trading Forex? Session expired Please log in again.More...