What timeframe to choose?

Good time of the day, fellow traders. Forex beginners face a very large amount of information: there are many strategies, indicators, training courses, etc. And one of the most important decisions you have to make is to choose a timeframe. That is what chart to trade? A five-minute (M5), 1-hour (H1), a 4-hour (H4) one? After all, we want to make profit quickly and a lot!

So, what chart scale to choose? Read on and you will find out. Prepare to be surprised.

It is no secret that the most popular is an intraday trading on Forex. Why? Everything here is clear: people want to earn a lot, quickly and at once. They think they will be able to catch all the slightest fluctuations on the charts and close with a profit at least 95% of transactions. Beginners also think that trading in small timeframes (M1, M5, M15, M30, H1) they will open many trades quickly and will train enough to become pros.

Here is what I’ll tell you - all that is a way to lose money. At least for a beginner.

How do you imagine yourself a trader?

When you start to trade and think about your future career in trading (of course with a Lamborghini and a bunch of photo models), you probably have an image of a successful trader. It is usually a man in a suit, or at least ironed shirt, sitting all day at a bunch of monitors and performing thousands of transactions, at the same time responding to calls and letters of grateful investors who gave him millions in management.

A more realistic picture: a man wakes up at night with a wake-up call, goes to the computer in his boxers and starts analyzing daily charts for 15-30 minutes, calculates the stop-loss, open/close positions and goes back to sleep. The next day he only a few times checks the situation on the market in the beginning of European and American trading sessions, and the rest of the time spends with his family, enjoying some kind of hobby, resting or engaging in self-education, such as reading books on Forex trading.

Here is why I tell you this: stop intraday trading! Trading on M5, M15, etc. is a work for professionals.

Beginners should only trade on daily charts

Yes, I want you to remember it. Think again!!! Why do you need stress and lost deposits? Without a trading experience of at least a few years, you will not make a damn on small timeframes. Believe me, I’ve been such a fool, I wanted all at once. It will not work. You will just lose your deposit, write on your Facebook page that Forex is a scam and go back to funny pictures on the internet.

Think about it: why almost all the books on trade, not only classic ones (when there was no possibility to trade intraday remotely), but also contemporary, explain everything on daily charts? Why are even many candle figures called, meaning the daily charts (internal day, reversal day)?

Because of trade in the late afternoon, after the day candle closure is the most profitable, cheap (in terms of broker commissions) and a very easy way of trading. Next, I will try to prove it to you, dispelling a few myths at the same time.

There is way less stress on daily charts

Many people underestimate the emotional component in the success on the currency market, thinking that the whole thing is just about strategy. It is fundamentally wrong.

Nerves, emotional looseness lead to a heap of errors, anger, desire to fight back after losing the deal and, as a result, an even greater loss. When trading on the daily charts the psychological pressure is at least 3 TIMES LOWER than in intraday trading. I already wrote about it. Believe me, after switching to the daily trade, trading will be much easier mentally.

Trading at the end of the day you save money on broker commission

It is believed that trading on daily charts is unprofitable due to swaps. Nonsense. Firstly, swaps can be both negative and positive. Secondly, it is about 1-1.5 points per day. Equivalent to entering the market a couple minutes earlier / later. Well, you kept the deal for 10 days, even 10 points losing on swaps, you have finally earned 150 points. 150 - 10 = 140. It is within tolerance.

Now think, how many transactions you need to open within a day, say on the M5 to earn the same 140 points? Many, about 20. And at the same time you pay a commission in the form of spread for each transaction, about 1-3 points each time.

And after a deal on a daily chart, we give a broker the same spread (1-2 points) only once + a small part of the profits in the form of a the swap. The result is still more profitable than the intraday one. But, if you are so much afraid of swaps or you are planning to hold positions for months, you can open a Non-swop account.

It is much easier to trade in the end of the day

Many people know this, but do not attach much importance to it – TECHNICAL ANALYSIS WORKS BETTER ON DAILY CHARTS. Yes, graphical figures and patterns work out better on daily candles, indicator systems have a greater winning percentage, much less “noise” that can break your stop loss. Open the platform and check it yourself.

In addition, when you open a position you have time to think, to analyze, to assess the situation correctly, calculate the size of the position and without unnecessary emotions enter the market.

You need a big deposit for daily charts

Another myth. Some fool told that and it spread out… Having a standard account you just need 500 dollars and a wise money management for trading on daily charts. If it‘s too much for you, open a cent account – anybody would find 50 dollars.

There are fewer possibilities to earn on daily charts!

Not at all. I will tell you a secret that I was surprised to find out some time ago. AFTER A MONTH OF TRADING ON DAILY CHARTS YOU WILL EARN NOT LESS, BUT PROBABLY MORE THAN ON INTRADAY TRADING. It can seem false because it seems that there are much more entries on intraday…

But it is so. Think yourself which is better: to open 20 transactions having 10 points of profit each, or one with a profit of 200 points? In terms of savings on the commissions, of course, the second one will be more profitable, but we are talking about something else here. I want you to understand what can be within the day if you enter the market 3 times, and on the daily chart on the same day only 1 time, but the end result is not worse, and even better.

Furthermore, when trading at the end of the day you have the opportunity to trade even with 20 currency pairs. And there will be a plenty of signals on so many instruments. Can you trade at the same time on the same number of pairs intraday? Of course not, it is physically impossible to keep track of everything in a short time.

Trading on a daily timeframe, you spend less time

Just 20-30 minutes a day is enough. You do not need to stare at the monitor all day long, the price is not affected, and you are looking for the new entries only after the closure of the current daily candle. I personally still check the Terminal 2 times a day (I cannot resist the curiosity), but there it really no need of it. Half an hour a day after closing the daily candle is more than enough. It is convenient by the fact that you do not need to be distracted from your regular work. Trading is becoming something of a hobby in the evening with a good income.

Where do you hurry?

I do not know why, but beginners have a feeling - “faster, faster, as soon as possible and more open positions!”. Seems like forex trading closes in a week. The foreign exchange market will exist as long as there is money, and the opportunity to open trades will always exist. Now, a year later, and after 5, 10 years.

Forex is a great facility where huge money flow and nobody will feel that you lost on minute charts. The market does not care about you. So do not rush, there is no need now to urgently climb on minute charts, you can open a deal tomorrow or the day after, or a month later.

Wait for a good opportunity to enter the market on daily charts and only then open orders. I say once again: NO NEED TO HURRY.

Daily timeframe strategies

What strategy to use for daily charts trade?

As for the trading techniques, I can recommend the Price Action above all (I trade using this method), and the following strategies:

• The DIBS Method System
• Trading System “Green Red Candle”
• The Yen Trader trading system
• Turtle Strategy

In general, almost any strategy can be adapted to the daily charts, it is sufficient to adjust the values of the take-profit and stop-loss. Well, sometimes the rules as well. But, it is a topic for another article.

Take care, Michael

ForexTraderPortal.com