Hello sharpturn,
Welcome to forex trading, and welcome to this forum.
Regarding time frames, and their use —
Most traders who have progressed beyond the newbie stage make EACH trading decision based on 3 or more time frames. And the generally-accepted way of doing this is to analyze those time frames in order, from higher to lower. You will often hear this referred to as “drilling down”.
Trend traders, counter-trend traders, and range traders all typically use a multi-time-frame analysis protocol. Let’s talk about trend traders — traders who analyze their charts to find price trends, and then trade in the direction of those trends.
In multi-time-frame analysis, the idea is to determine whether a trend — that is, a direction or bias — exists on the highest time frame, and if so which direction that trend is pointing (up, down or flat); then to look for confirmation of that trend on the intermediate time frame; and finally, if confirmation is found, to look for an appropriately timed entry into the market on the lowest time frame.
There are many ways to identify a trend. There are many ways to define confirmation of that trend. And there are many ways that well-timed entries can be signaled. Put all that together, and you have virtually countless different ways that a trend trader might go about finding a promising-looking trade, and planning his entry.
There is a thread here on the Babypips site which will teach you, in a very short time, how to use a very easy and very effective trend-trading approach which incorporates a 3-chart analysis protocol. The thread is called 301 Moved Permanently and I encourage you to study that thread. In a short time, you will master the concept of time frames, and the concept of multi-time-frame chart analysis. And you will learn a trading system which MIGHT just be the only system you’ll ever need in your career as a trader.
The 3 Ducks thread has been active continuously since it was started 7 years ago. That’s remarkable longevity for any thread on a forex forum, and it speaks to the fact that the 3 Ducks system is not only easy to learn, and profitable — but, it is also durable. That is, it automatically adapts to changing market conditions.
“Captain Currency” (real name Andy Perry) is the trader who developed the 3 Ducks system, started the thread, and continues to teach his system here on the forum. He has written an ebook detailing his system, and he offers the ebook for free to readers of his thread. You should download a copy, as soon as you can, and study it carefully. You’ll find the instructions for requesting it in THIS POST.
After you have learned the 3 Ducks system, you will have a better understanding of time frames and multi-time-frame trading than half the traders out there.