It is true that a successful trading system must be profitable on all currency pairs and time frames. The best thing about forex trading market is that it is open 24 hours a day from Monday to Friday.
So it seems very easy for the traders to trade with any time frame they like across the world. In addition, it is also true that the level of success also depends on how many times the trader used along with the type of time frame.
In this post, the trader will be able to go through different time frames in forex trading practices. Also, they will also get to know about pros and cons of trading forex time frames.
In what time frame the trader need to trade?
The time frame chosen by the trader to trade is considered as the greatest contributions to their success and even in their failure. It is also evident that one of the biggest error or mistakes traders mostly make is over trading.
But it is said that trading with higher time frames helps the trader to minimize the amount of trade they trade with and also to develop patience.
Different types of time frames in forex trading
- Long term time frame
This type of time frame mainly refers to weekly or daily charts.
- The best thing about this time frame is that the traders are not required to look after the intraday markets.
- It also refers less transaction, and it means that the traders will get a little time to pay the spread and thus getting maximum time to think more through each of the trade.
The chances of losses are more with this time frame as it requires great patience level, and it also requires long terms swings which are usually less.
- Short term time frame
With the help of short forex time frame trading, traders mostly use hour based time frames, and they tend to hold trades for some weeks. It may be from several hours to a week.
- With this time frame, there are less losing chances and a trader get maximum opportunities for trade.
- In addition to that, the traders can also depend on their one or two trades in a year to make money and earn profit.
With this type of time frames, the traders have to pay high transaction costs and they also have to give more spread to pay. Along with that the overnight risk also becomes a major factor.
- 1-hour time frame
This is the time frame which is considered to be the best trading time frame for those who are mostly active for trading in the market. It is also useful for them who are in front of their system witnessing every single move in the market.
But with this time frame, one has to be proficient for differentiating between when the market is moving and when it is not moving.
- 1-hour trading forex time frame works very fast for a trade to in and out.
- As said earlier it is best for the traders who sticks with their system and can change their decision along with a single move in the market.
- With this time frame, a trader can also use tight stops and he/she can get great entries in the market.