I’m going through the Pipsology courses and I’m noticing certain charts have different time frames. If you’re using a daily chart are you waiting days and to see what the information will tell you? Each candlestick would be a days worth of trading? Other times I see charts using a 15 min time frame or a hour time frame. How does one know when to use a certain time frame?
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The right time-frame is basically commanded to you by your strategy. If you’re trading intra-day, you might look at the weekly charts but its hard to think of a strategy in which a trade would last 45 minutes based on the weekly candlestick chart. But you might look at the weeklies to see what’s happening long-term: prices in an uptrend go up easier and more often than they go down.
I trade multi-day only so I never look at a time-frame chart less than 1 day. For me the weeklies are also very important. I am rubbish at day-trading so I don’t do it, and I see a lot of people don’t have the time to screen-watch when the markets are active because they have other commitments.
Strategy first, plan second, everything else comes after.
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Those who are any good, use ALL time frames, possibly scalpers don’t, although they need to know at least their pivot points, S&R levels etc. Also Position traders may not use the shortest time frames.
However, we have to make decisions based on incomplete information, but there is no point in handicapping ourselves unneccesarily.
Know what your trends are (You may be in a monthly downtrend, daily uptrend and hourly uptrend, but a 5 minutes downtrend, all at the same time and you can make money in any of them - if you are nimble !)
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The time frame depends on a couple of factors. One is trading style. Do you want to be a day trader or a swing trader? The other is volatility of the asset. Some assets move a lot in a short period of time and larger time frames filter out some of the noise. The last is risk. The larger the timeframe the larger the distance to your stop loss must be.
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Hello,
It depends on your preference. I like to start planning on the Daily chart, then move on to the 4 hour chart. I place trades in the one hour chart. I close and open trades daily, I never carry over to next day. This is what works for me at least.
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Nice description. Thank you. Really It depends what trading strategy you have right now. When I use scalping I have to depend on short term. It supports sometimes to calculate the market which is really supportive to bring profit by my trading approach.
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My recommendation is to try out different strategies on a demo account and pick which time frame is best for you depending on the strategy you find to be the most easy and profitable to use. This is a very subjective experience for every trader and the end result depends on a lot of trial and error.
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My opinion is there is no right time frame for trading. It totally depend on what trading strategy are you following. As I am a scalper my time frame is very short. But I have seen many trader that they are following weekly charts. But in the beginning every trader should follow different weekly charts. So that they will understand the market patterns. But you have to define which is best for you.
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Yes it can be. Before entering live account its always supportive to use any trading approach in demo to see the performance how it works. it could be support for avoiding risk when trading with real money.