Among the various types of timeframes used by Forex traders to predict the market and trading, the chart is one hour long, and therefore one hour time frame is almost the most common. Although using this time frame shortens the time to refer to the chart, but because most traders tend to short-term trading, one-hour candlestick charts are very common. But maybe you are new to Forex trading or the financial markets in general and still do not know exactly what time frame is and how to find the best trading time frame according to your analysis method. So let’s talk to you a little bit about that.
Timeframe, or period of time, is one of the ways to show the price chart in terms of time. As you know, this chart has two main price-time axes that show us price movements based on the progress of time.
The scale showing the price on this chart depends on the type of market, for example in the New York Stock Exchange based on the dollar and in the Forex market based on the ratio of price changes of two currencies (for example, the ratio of euro to dollar).
But the scale on which the information is displayed on a time axis depends on the trader’s choice. For example, if someone selects the Daily Timeframe as shown below, each of the candlesticks (click here if you do not know the meaning of the candlesticks) represents price changes over a full day.
Therefore, the high, low, open and close of a candle stick in the daily time frame represent the starting price, the lowest price, the highest price and the closing price of the market on that particular day. If we change the time frame to M15 mode, these values will indicate changes in that particular 15 minute interval.
Types of trading time frames
One of the most common trading platforms in financial markets, including Forex and the stock market, is MetaTrader 4 software, in which the following timeframes are prepared by default, and the trader can choose one of them according to his trading preference. Select:
- M1 (one minute)
- M5 (five minutes)
- M15 (fifteen minutes)
- M30 (30 minutes)
- H1 (one hour)
- H4 (four hours)
- D (daily)
- W (weekly)
- M (monthly)
Of course, in MetaTride 5 and other analytics platforms, there is the ability to add custom timeframes such as 10 minutes, 2 hours, 8 hours, two days, two weeks and..
The importance of long time frames
Long-term market charts provide an overview of market trends that cannot be achieved using short-term charts alone. The most prominent feature of long-term timeframe charts is that not only do they clearly show trends, but those long-term trends last for weeks and months.
Imagine being able to predict the market based on one of these long-term trends and not need to change your forecast for a long time. On the other hand, price patterns also appear in long-term charts and are interpreted in the same way as in Daily charts were done.
What is the best time frame?
The answer to this question is the same as the answer to the question, “What is the best food?” Certainly everyone’s answer will be different based on their analytical methods and experience. But what is clear as day is that the best way to use timeframes is to work in a multi-time frame. In other words, analysis in long-term charts and trading in short-term timeframes.
In this way, you will have the best analysis in the long-term chart, and in the short-term chart based on that analysis, you will enter the trade at the best point and therefore experience the best trade. This is something that followers of various analytical and trading schools such as Price Action, Elliott, Indicator Traders and ک repeatedly recommend.
Now, in your opinion, what are the best time frames according to your trading method?