What timeframe is better to trade on? Types of timeframes
It depends on many factors, but primarily on how much you plan your profit and loss.
Losses are an integral part of trade, therefore they cannot be excluded from consideration in any way. As you know, the minimum adequate profit to loss ratio is 1: 2. Consequently, profits should be at least twice as large as losses.
This is the first point.
The second point is specific numbers. Stop size Fixed your stop or depending on the extremes - it does not matter. The important thing is whether your medium-term trading or intraday trading.
It is foolish to focus on the daily timeframe when trading within a certain trading session, or even within a day. It is not worthwhile to miss the older timeframes from attention, but you open deals in any case, focusing on the M5-H1 timeframes when trading intraday.
However, now we move on to specific timeframes, their features, and figure out which timeframe will be most comfortable for you. We take a certain period of time in consideration.
Monthly and weekly time frames.
If you plan to grow old, waiting for a signal on these timeframes, then they are for you. In the Forex market, it’s rather a scale for tracking global trends, so that you have an idea of which direction to go if your trading is medium-term.
The stop size on such timeframes can reach as many as ten thousand points on a four-digit sign. Are you ready to lose so much money and time in case of an unsuccessful forecast?
The most average scale of the graph. It can serve both for opening long-term positions, and for orientation in medium-term transactions. Intraday traders also turn their attention to this time interval. If your trade is focused only on one specific tafmframe, then stops on the daily chart can reach 200 points on a four-sign. Already not so scary, right? However, your transactions may be held in the market for months. It is difficult to detect a flat in the Russian Federation, and to wait out a flat on D1 is worth both time and money.
Four hour and one hour time frames.
Almost intraday timeframes, although for some resourceful traders they are still intraday. The stops at such time intervals are even smaller, can reach 40-100 points, depending on the volatility of the instrument. The favorite scale of intraday traders. This is even their working field. Calm measured trading, without a particularly long wait for the outcome of transactions.
Fifteen minute and five minute timeframes.
The most intraday intervals that are. Favorite field of activity of scalpers. At these intervals, there is significantly more market noise, but also significantly more deals, more potential entry points. The stops on such timeframes range from 10 to 30 points, also depending on the volatility of the instrument. However, if you catch the trend movement on M5 or M15, you can take the profit as much as on H1 for example.
On which timeframe trading іs better?
No one will give a definite answer to this question. It depends on what goals you set and what style of your trading. Do you want to combine trading with the main work, where constant monitoring of the terminal is not required - H4 is for you. If you just want to glance at the chart from time to time to keep track of the trend, D1 is for you. And if you are ready to sit for 6-8 hours in front of the terminal, scalping on intraday fluctuations - take M15-M5 and do not worry about anything other than the size of your stop. And remember, the lower the timeframe, the lower the stop and the higher the volume of your transaction.