Picking the right chart time frame depends upon a number of different factors such as; your preferred trading style, your account balance, and when you are free to trade etc.
In this article we’ll take a look at the benefits/downfalls of trading each time frame, I’ll also share with you our preferred time frames and why.
Choosing the right time frame that suits you, is imperative to becoming a consistently profitable trader. Notice the key words ‘that suits you‘, in other words most traders make mistakes during their early days because they are still finding their feet as to what chart time frame is best to trade.
You don’t have to always be in a trade! Some traders are so hung up on always being in a trade, thinking the more trades you take the more profitable you will be. Actually that is not the case, you could win five trades at 20 PIPS each earning you 100 PIPS. Or you could take one trade and make 200 PIPS.
So it really all just depends, like many traders you have probably experimented with trading different time frames, perhaps you started on the 5 Min Chart, then the 15 Min Chart and then maybe the 1 HR Chart. This was you finding your feet and perhaps you still are.
What is the best Time Frame to trade?
|Chart||Description and Time Frames||Pros||Cons|
|Intraday Charts||The minute charts (1M, 5M, 15M 30M etc.), Intraday as the name suggests are trades that are taken and exited within the day.||There are more opportunities for trades, as there is a lot more price movement.||As learnt in a previous article, the problem with the lower time frames is that there is too much market ‘noise’, which in the overall market sentiment is mostly invalid.|
|Short-Term Charts||These are the hourly charts (1HR, 2HR, 4HR, 8HR, it is also possible to add the 12HR to this). These trades can range from a few hours, a few days or even a week.||Very comfortable trading, less pressurized than the Intraday Charts. The Trades are more accurate as they represent a larger span of price action.||Stop Losses would be larger because of the larger time frames, a simple way to combat this though is to reduce your trade size.|
|Long-Term Charts||These are the higher time frames such as the Daily and Weekly.||Very long time to plan a trade, don’t have to watch the charts as often.||Patience is required, there may only be a few trades for the entire year.|
What time frame/s do we trade?
So, after looking at the table above it’s best to make to your own decision, based upon your preferred trading style, how much money you have to trade, when you are available to trade etc.
Personally, we prefer the 8HR, 12HR and Daily Charts.
There are a few reasons for this:
- Less screen watching, we only have to check the charts once or twice a day, meaning we can actually live our lives at the same time.
- A lot of time to plan our trades, this means that we are not rushed into making trading decisions and there is less chance of making a mistake.
- Plenty of trading opportunities.
- After years of trading other time frames, we have established that these time frames work best for Price Action and are the most accurate (according to how we trade!)