Timeframe is reflected in the unit time. This is not a complicated concept but in trading you have to know the timeframes used wisely. Concretely, when you analyze a chart daily, ie each point of closing is done in the evening, using a daily timeframe.
In addition to the definitions in this chapter we will learn to use the timeframes as a weapon and not a burden. As insignificant as it may seem, because the timeframe yet the loss of many traders. You should know on how many units of time we have to analyze the course, judge the importance of each suit his trading, in short … Anyway we must not take this course lightly;)
What reference timeframe choose?
This is a problem that poses very subjective conditions. He must already know what we like, do we prefer trader scalping, intraday, swing or even in in the medium term. A range of timeframes offers to each of its methods. Note that all forex brokers offer the possibility to vary your time frame.
How to choose a timeframe?
The choice of the branch in which you are trading is watching you, however we can try us some advice.For someone whose day is filled with work and downtime (employees, students, …), it is best to choose a method of swing or medium term. In this way, it is not necessary to be stuck in front of it all day, just look at his positions in the evening or morning.
For a fully available and being fully desire to trading full time person, we recommend the view intraday trading scalping. So you can trade all day and expect nothing.
Advantages and disadvantages of each Timeframe
That’s all that, but what is the swing, intraday …? And what advantages and disadvantages does it arise?
Let us see each of his methods in detail:
scalping: This is a very aggressive strategy to achieve a high frequency trading on smaller timeframes, positions can last from several seconds to several minutes and objectives are very limited. The main advantage is that you can trade continuously throughout the day, otherwise the trading frequency allows to have regular monthly earnings. The downside is clearly spread it heavily impacts the strategy and forces the trader to adapt to this deadweight loss.
Day trading: (Or intraday trading). softer than the scalping strategy, the aim here is not to amass dozens of trades per day but a few, of the order of 1 to 5 trades on the day on average. It uses a timeframe ranging from 15m to 1 hour and positions can last from several hours to a day on average. Gains in the tens of pips. It is not uncommon to stay overnight on its positions.
Swing trading: This is the zen quiet trading while maintaining good efficacy. These words sum up the swing, it is to take positions over several days or weeks. For this method the patience is required, it would be foolish to think of swing and stay all day in front of the screen. The signals are not crowds and trades last. generally used graphics in 4 hours or 1 day for analysis. In short, it is a trading or we will see home in the evening to see how are his positions and how to prepare new.
The medium term: This is a carry trader profile generally, these are positions of several months. The long period allows trader simultaneously interest rate differentials and thus increase its profits. Here we see almost an investor profile action rather than an individual forex trader profile or amateur.
How to use multiple timeframe to Forex?
Then we saw what timeframe reference to prefer as everyone now see how to use several different.For the beginner, it is not very advisable to get lost in a plethora of time units. It is clearly preferable to use a reference timeframe on which we find our input signals. And then look at other timeframes for judging purposes only the overall situation.
Simply, you will confuse you. Much two timeframes will corroborate your view, they can just as easily discredit him.
Example: You trade on EUR / USD H1, you observe a buy signal with a bounce on a moving average. Then you look H4 and then there you see a bearish divergence on the RSI which did not appear in H1.
Well, hard to say. What is important is to focus on a timeframe. You will always find a way to discredit your input signal by another timeframe and so you never traderez. It may be interesting to look at other units of time but it will not be what you see affects your trading plan. The best early (and even for more experienced) this is not a look (or two at the limit according to the strategy) unit time.
The concept is fairly obvious and it is not necessary to illustrate this very well but you can also have information that confirms your prediction, and in this case your analysis will be more valid. Also, if you want to use several units of time simultaneously, some triads timeframe agree fairly well, so see:
- 1 min, 5 min and 30 min
- 5min 30min and 4 pm
- 15 min 1h and 4h
- 1h, 4h and 1day
- 4h, 1day and 1week
These timeframes that you find on most of the platforms are the best known and associated in this way they are quite effective. Moreover, it is also advisable to avoid timeframes little used as 2 hours or even 8am. It is best to stay on rather customary units of time
In this course, we have done more to prevention than practical learning. After all these instructive chapter, it is necessary to successfully take a step back on technical analysis and can reason by itself.