You need to know what a time frame is before you trade Forex
A time frame basically shows you the market activity during a selected time period.
You can choose to view time frames from one second, five minutes, one hour, one month, yearly bars and so on…
So if you take one hour time frame, then each bar on the chart will show the market activity – buy and sell prices – from when the bar opens to an hour later when it closes.
Straight after an hour, a new bar will open and over a few hours later, you’ll see a whole bunch of one hour time frame bars in one chart.
The more you play around and test these time frames, the more likely you’ll find the one that will best suit your trading style.
Knowing what your best time frame is, will help you keep more consistent with your trading results while you’re following your winning Forex trading strategy.
It will also curb the confusion with having to deal with too many time frames which could have a detrimental impact to your trading.
Now that you know what a time frame is, let’s look at my three tips to help you find your best time frame…
Tip #1: Know how many trades you’d like to take!
First question you have to ask yourself is “How many trades am I looking to make in a week?”
Are you looking to trade more than five times a week or do you want to trade like me, twice a week?
Here’s a general rule that you can follow to help answer this essential question…
The less trades you take a week, the longer your time frame should be.
In fact, if you want to trade on a four hour time frame, then it can take a few days just for your trading strategy to line up…
On the other hand, if you enjoy the extremes of Forex trading and wish to be in and out of your trades on a daily basis then shorter time frames sounds more like your kind of vibe.
You can choose time frames from one second through to 15 minutes.
You’ll be sure to take a lot more Forex trades, with shorter time frames.
Tip #2: Pick the right time frame for your personality
If you’re looking at trading shorter time frames, then know that it’s going to play on your mind.
Having to take one trade after another, when you first start out trading Forex, will make you feel more rushed and anxious when getting into them.
You’ll also have to endure more losing trades in a shorter time frame, than if you trade with longer ones.
If you prefer taking less risk, then I’d suggest you choose a medium time frame such as 30 minutes to an hour…
You’ll feel less rushed getting into your trades because, it will take longer for your trading criteria to line up.
Tip #3: Know how much capital you have to trade, before you choose your time frame!
If you decide to trade using a longer time frame such as, a four hour or daily time frame, when a trade turns against you, you’ll have to risk more money.
I assure you that the trading movements in a 60 minute bar are a lot more than the movements in a five minute bar.
So if you’re willing to risk less per Forex trade, then you should look at trading shorter time frames.
I know plenty of professional traders who are very successful trading from the shortest up to the longest time frames.
You can definitely profit from any time frame depending on your trading style.
However, you need to go out and see which one suits you best.
“Wisdom Yields Wealth”
P.S Click here if you’d like to skip the steep learning curve and boost your Forex trading career!