Day charts! No, 1 Hour charts! No, 4 Hour Charts! If you’re a person who likes to get trading advice from FOREX forums, then we’re sure you’ve read something along those lines before. These declarations are, in fact, answers to one of the most frequently asked questions from new traders.
Which timeframe is the best one to trade on?
It has been a topic of fierce debate for years. Scalpers swear by micro time frames like the 5 and 15-minute charts. Intraday traders love looking at the hour and half hour time frames, while swing traders swear by the longer week and monthly charts. So, which one of them is correct?
The answer is simple…it depends on you,
Types of Traders
Essentially, the timeframe that is best for you depends on the type of trader that you are. The type of trader you are depends on the amount of risk that you’re willing to take, and your patience level.
Scalpers tend to be risk takers. They enjoy the rush of entering a trade with a large lot si and making quick entries and exits in the market. Trading the 5-minute charts and 15-minute charts are perfect for them. Trading them allow scalpers to make a lot of trades in one day. It also means long screen hours, and the inability to see when the market is making a change in direction. This encourages tension during trades because the trader does not have any certainty of where the market is going.
Day traders tend to use the 30 minute, 1 hour and sometimes the 4 hour time frames. They open and hold trades during the day, meaning that their trades can last from a few minutes to a few hours. They complete their trades within 24 hours. Day trading is the most popular way to trade and it’s common to see FX trading forums filled with these types of traders.
It is less risky than scalping because day traders do not have to rely on very tiny price movements in order to make profits. (Traders do not have to up their lot size in order to make profits.) Using the medium frames allows the day trader to better manage risk, and allows them to see any small trends during the day. It also allows them to make several trading positions in a day.
The swing trader is one who trades the long day, weekly and monthly time frames. They tend to like very low risk and the certainty of clearer trend lines. This way of trading requires a lot of patience and discipline. Unlike scalpers and day traders, they only make a few trades (maybe even one or two) and tend to hold their trades for a long period of time, from days to even months.
So, the question is, what type of trader are you?
What is your attitude towards risk?
How long are you comfortable holding a trade?
Once you’ve figured that out, then you are well on your way to figuring out which time frames best suits you.
Here’s a tip, test out the different time frames to see which one best suits. That’s the guaranteed way to know for sure.