What is a time frame?

Timeframe is one of the main components of technical analysis in financial markets. The importance of the topic of timeframes is evident from the fact that many traders are constantly changing the time period of their charts and are still hesitant to continue their activities in the market. Many of them consider the main problem when choosing losses to choose the wrong timeframe!

In general, price and time are the two dimensions that make up each price chart, and the time frame for displaying the price of various asset charts is called a timeframe. It can be said that it means displaying the price based on a certain time scale. For example, each candelabra in a one-hour chart shows the result of price fluctuations in the past one hour of the market in the form of four components: opening price, highest, lowest and closing price; In analytical platforms, they are called OHLC for short .

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Types of graph timeframes

Due to the sensitivity and importance of this element of the price chart, today there are different types of timeframes in technical analysis software and according to the needs of users, different short, medium and long time periods in the form of minute, hourly, daily, weekly and monthly charts. Have been created. The types of timeframes are not the same on different trading platforms; But the main diagrams of the diagram are as shown in the table below.

The main factors associated with the choice of time frame

How you choose your timeframe largely depends on your investment style; Which includes key components such as investment time horizon, risk management, analysis method and personal thinking. In fact, traders will not be able to determine any of the important details of their trading strategy, including timeframes, unless they are fully aware of themselves! In the following, we will briefly explain each of the mentioned factors.

1- Investment time horizon

In order to better understand the relationship between this issue and chart timeframes, we draw your attention to two hypothetical traders. Person “A” is a short-term oscillator, who trades from minutes to an hour. Investor B , on the other hand, tends to take several-week trading positions. It is clear that the charts used by these people are not the same and vary according to their investment strategy. Therefore, the timeframe is a suitable chart for trader “A” for a maximum of one hour and second person, daily or weekly.

2- Capital management

One of the most common ways to determine exit points (profit or loss limit) is to use the support and resistance levels in the price chart. The use of larger timeframes increases the possibility of longer distances between entry and exit points; Because the amount of price movements and the distances between the floor and the ceiling of the market in these timeframes are usually more and the traders are forced; In order to select safe exit areas, bear the high damage limit.

On the other hand, the use of short-term timeframes causes; The risk of analysis error is increased and you will probably have more loss-making trades. As a result, you need to carefully follow the tips for determining the volume of transactions and capital management.

3- Analysis method

Imagine a graphic price pattern such as “head and shoulders” . Forming the mentioned pattern in the weekly time frame requires consecutive weeks or in other words several months! In addition, it is possible to reach this conclusion after observing the weekly head and shoulders; That the model is not formed in ideal conditions and is not evaluated in a suitable position. The sum of the above conditions indicates that you will take several months to enter into a suitable transaction. On the other hand, if a person trades on a Japanese candle pattern in minute timeframes; He usually has a lot of trading opportunities during the day.

If all these trading opportunities are entered into, it will not be possible to manage the assets and there will be heavy losses. In fact, just as a large number of trades is not appropriate, very few trading positions, albeit with high individual returns; They may not fully meet traders’ revenue targets! As a result, pay attention to your analytical method when choosing a time frame; Ensure that you have a reasonable number of trading opportunities ahead of you by balancing them.

4- Personal thoughts

The individual morale of stock market traders will have a positive effect on the selection of important details of the trading strategy and, of course, their financial success. Although the concepts related to trading are teachable and if they continue, they become skills in people through business acquisition; But the effect of traits developed in a person from childhood is undeniable!

For example, trading in minute timeframes requires a lot of stress due to the sharp fluctuations of the midday market. As a result, a person who experiences high levels of stress in all of their day-to-day life is more likely to be unsuitable for such transactions; Because the psychological pressure caused by rapid price movements, successive gains and losses, در, in practice deprives the trader of the possibility of making the right decision! As a result, you should pay attention to your personal characteristics when choosing a trading time frame!

What is the best graph time frame?

Due to the various factors involved in selecting the time period of the chart, it is not possible to easily comment on the best trading timeframe. In fact, the best trading timeframe does not exist at all ; Because choosing the right timeframe based on the individual characteristics of traders will not follow a single formula! In other words, determining the timeframe in technical analysis is a completely person-centered matter. As a result, all individuals should carefully evaluate all the factors influencing their trading process and choose the appropriate timeframe chart.

What is Multi-Frame or Multiple Analysis?

Due to the importance of timeframes and their direct effect on the trading results of individuals, many researches have been done in this field and advanced cases of how to use timeframes have become common. Multi-time or dual analysis means that you do not necessarily have to use one time-frame to do your trading, and the time period for analyzing and determining the trend can be excluded from the time-frame of entering the trade!

Simply put, when using dual analysis; In the chart with a larger time period, determine the main trend and levels of possible price returns, and in one or more lower timeframes, based on the items specified in the main chart and your trading strategy, you will trade in the lowest possible risk.

It must have happened to many of you, that based on the occurrence of ideal conditions in a timeframe, you have bought and after a short time, you have sold the mentioned shares with a heavy loss, and it has been determined by referring to the higher timeframe, which is exactly in The threshold of a major resistance has entered the trade! The resistance mentioned in the chart with a low time period was unknown. In fact, the main advantage of multi-timeframe analysis is the reduction of the possibility of surprise and making wrong moves in the financial market.

Today, some traders use three or more trading frames in a more professional manner; To trade in the best possible places. Keep your analysis and trading timing in mind; You have to choose the best possible time combination based on the working method and other factors. Graph timers should be chosen in such a way that they are reasonably spaced and that the individual can react as quickly as possible.

Conclusion

In general, the issue of timeframe selection has always been one of the major challenges for technical analysts; In this article, we have described the related cases in detail. Remember, choosing the best possible time period for your graph analysis requires experience in trading the market and accurate personal knowledge.