What are the Best Time Frames in Forex Trading?
- August 24, 2021
- Posted by: Daniel Richard
- Category: Forex Trading
Choosing the best time frame is one of the essential things for forex traders. As a forex trader, you can identify the best time frame by analyzing the forex market. If a trader sets up a time frame without exploring correctly, they may lose in a trade.
Many forex traders use the wrong time frame; for this reason, most of the time, they lose their capital. But, many traders struggle to choose the best forex trading time frames, and they establish themselves as successful forex traders.
What are Time Frames in Forex Trading?
In a forex trading platform, the time frame is a specific time for trading where a trader can open and close their position within this particular time. The time frame may be measured by minutes, hours, days, weeks, etc. It also determines the short term, middle term, and long-term time frames. So, traders should select the best one according to their strategies.
If you analyze the market conditions and have the right idea about you and your trading system, you can easily select the suitable forex trading time frames and start to use them. The exact time frame will help you to open a position and trade within a particular time frame, and also, you can close your position after trading.
What Forex Time Frame Should I Trade?
The time frames of forex trading and the trading style are deeply related to each other because without identifying your trading style, you cannot choose the best time frame. If you are worried about which time frame will be better for your trading, first, you should research what type of trader you want to be. If you like scalping and want to be a scalper, you can select the short-term time frame.
Long-term trading is less risky than short term. So, most of the traders want to be risk-free. That’s why they choose the long-term forex trading time frame.
Best Forex Time frames for Scalpers
Scalping is a very short-term trading system in forex. Within a short period, traders quickly identify the minor price change in the market, and according to their identification, they buy or sell in this short time. Traders can trade several times a day. For this reason, they can build a series of gains by repeating this short-term method. This series of gains make a healthy profit at the end of day.
Scalpers use a few minutes for trading; the duration of this time may be one minute to fifteen minutes. Generally, they earn one to twenty pips per trade. Some brokers use a two minutes time frame, which means if you trade more than two minutes, brokers can remove your trade. So, before starting to trade, you have to confirm the time frame.
You should watch the market movement and select an appropriate entry position. Then you can buy a certain amount of currency and wait for the rate. If it increases, you can sell your buying currency and earn a small profit within your selected time. As a beginner, you can use this system for trading because it is less risky.
Best Forex Time Frames for Day Traders
Day traders choose a short-term time frame, and the duration of time may vary from trader to trader. But, most of the traders’ choice is 15 minutes to 4 hours trading time. The day trading system is very popular among forex traders because a day trader can choose a range of different time frames according to their market liquidity. They can select a suitable time frame for their preferred trading strategy.
A part-time trader can use a 15 minutes time frame for making an immediate profit. On the other hand, a full-time trader can select a daily or hourly time frame. They should use their time correctly by analyzing the market conditions and choosing a suitable market entry position. Nevertheless, day traders should be careful about their exit position and closely monitor the rate of currency movements.
Best Forex Time Frames for Swing Traders
Swing trading is a trading system, traders who have enough time to trade overnight. Swing traders select this system for a long-time frame. The time frame of swing trading is a couple of days to a few weeks or sometimes several months. So, they get sufficient time for analyzing the market position, that’s why they make a big profit.
Swing traders use stop loss and profit to fulfill their target. They profoundly monitor the currency movements, choose an appropriate entry position and take a long time for trading. At last, they can gain profits. The most important thing for a swing trader is to have sufficient patience and adequate experience in this trading system. Swing trading is not favorable for beginners.
Best Forex Time frames for Position Traders
The position traders select the best position and take it in the forex trading market. They also hold this position in the belief of increasing the value of the currency in a particular time frame. Position traders hold their trading position for a long time. These traders do not make several trades, but they can make one trade for a very long time. The duration of this kind of trades may be several weeks, months, or a year.
The position traders follow the trend because the main aim of position traders is to identify the direction. They have not locked their money like the traditional buy and sell investors. Traders recognize the trend and buy and sell when the value of the currency reaches its maximum rate.
How to Perform Multiple Time Frame Analysis
In multiple time frame analyses, traders find out a particular currency pair for different periods of time. Almost every trader chooses a long-time frame, and other traders choose a short time frame according to their trading opportunity. In a short-term time, frame, traders use one hour chart; for the long-term time frame, traders use a four- or six-hours chart, but in a multiple time frame, traders use a 1:4 ratio.
Traders use the longer time frame for establishing a trend; the shorter time frame can be used for recognizing the best entry position in the forex market, and the middle term time frame can be used for more granular analysis.
It can be possible to manage a different trading position at the same time by using the multiple time frame analysis. There will be no extra risk for using this technique. For these numerous trading time frames, you can also use different kinds of trading indicators.
Therefore, the forex trading time frames are part and parcel for the forex traders because it is impossible to plan a successful trade. Different time frames are used for different strategies. So, before setting up a time frame, you need an adequate analysis.