Which Timeframe Is Best?

Good time of day, fellow traders. Forex beginners are faced with a very large amount of information: there are many strategies, indicators, training courses and so on. And one of the main decisions you will have to make is choosing a timeframe. That is, which chart should you trade on? A five-minute one, an hourly one, a 4-hour one? After all, you want to earn both quickly and a lot!

So which chart scale should you choose? Read on and you will find out. Get ready to be surprised.

It is no secret that the most popular style in Forex is intraday trading. Why? Everything is obvious here: people want to earn a lot, quickly and right away. They think they will be able to catch every tiny fluctuation on the charts and close at least 95% of trades with a profit. Beginners also think that when trading on small timeframes (M1, M15, M30, H1) they will open many trades, train quickly and become pros.

So, here is what I will tell you: all of this is a path to ruin. At least for a beginner.

When you are just starting to trade and thinking about your future career in trading (naturally with a Lamborghini and a bunch of photo models), you surely picture the image of a successful trader. Usually it is a person in a suit or at least an ironed shirt, sitting all day in front of a pile of monitors and making thousands of trades, while simultaneously answering calls and letters from grateful investors who have entrusted millions to him.

A more realistic picture: a person wakes up in the middle of the night to an alarm clock, walks to the computer in his underwear, spends 15-30 minutes analyzing daily charts, calculating stop losses, opening / closing positions, and goes back to sleep. The next day he checks the market situation only a few times at the beginning of the European and American trading sessions, and spends all the rest of the time with his family, on some hobby, resting, or engaging in self-education, for example by reading books on Forex.

So, why am I telling you this: stop trading intraday! Trading on M5, M15 and the like is the domain of professionals.

Yes, I want you to remember this. Come to your senses!!! Why do you need stress and lost deposits? Without several years of trading experience, you will not earn a damn thing on small timeframes. Believe me, I was the same fool myself, wanting everything at once. It will not work. You will only lose your deposit, write on your VKontakte page that Forex is a scam, and go back to looking at funny pictures on the internet.

Think about it: why in almost all books on trading, and not only classic ones (when there was no possibility to trade intraday remotely), but also modern ones, are all examples considered on daily charts? Why are even many candlestick patterns named with daily charts in mind (inside day, reversal day)?

Because trading at the end of the day, after the daily candle has closed, is the most profitable, the cheapest (in terms of broker commissions), and the easiest way to trade. Next I will try to prove this to you, while at the same time dispelling a few myths.

Many people underestimate the emotional component of success in the currency market, thinking that it is all only about the strategy. Fundamentally wrong.

Nerves and emotional instability lead to a lot of mistakes, anger, the desire to win back losses after an unprofitable trade and, as a result, to even bigger losses. When trading on daily charts, the psychological burden is at least 3 TIMES LOWER than with intraday trading. I have already written about this. Believe me, after switching to daily charts, trading will become much easier morally.

There is an opinion that trading on daily charts is unprofitable because of swaps. Nonsense. First, swaps can be both negative and positive. Second, this is approximately 1-1.5 points per day. It is equivalent to entering the market a couple of minutes earlier / later. So you held the trade for 10 days, let us say 10 points went to swaps, but in the end you earned 150 points. 150 - 10 = 140. Quite within acceptable limits.

Now think about how many trades you need to open intraday, say on M5, to earn the same 140 points? Quite a few, about 20. And at the same time you pay a commission on every trade in the form of the spread, that is, each time you give away 1-3 points.

But when entering a trade on a daily chart, we give the broker that same spread (1-2 points) only once + a small share of the profit in the form of a swap. In the end it still turns out more profitable than intraday. But if swaps scare you that much or you plan to hold positions for months, you can open a swap-free account.

Many people know this, but for some reason they do not attach much importance to it - TECHNICAL ANALYSIS WORKS BETTER ON DAILY CHARTS. Yes, chart patterns work better on daily candles, the percentage of profitable trades is higher for indicator systems, and there is much less "noise" that can knock out your stop loss. Open the platform and see for yourself.

In addition, when opening a position you have time to think, weigh everything, properly assess the situation, calculate the position size, and enter the market without unnecessary emotions.

Another myth from the realm of OBS ("one old woman said so"). Some fool blurted it out somewhere and off it went... On a standard account, for trading daily charts while following reasonable money management, an amount of $500 is quite enough. If that is a lot for you, open a cent account, any person can find $50.

Not at all. I will now reveal a secret to you, realizing which, I was very strongly surprised at one time. IN A MONTH ON DAILY CHARTS YOU WILL EARN NO FEWER, AND EVEN MORE PIPS, THAN WHEN TRADING INTRADAY. This may seem untrue, because it seems there are many more intraday entries...

But it is true. Think for yourself, what is better: to open 20 trades with 10 pips of profit or one with a profit of 200 pips? From the point of view of saving on commissions, of course 1 trade will be more profitable, but that is not what we are talking about now. I want you to understand that maybe intraday you will enter the market 3 times, and on daily charts on that same day only 1 time, but the final result will be no worse, and even better.

In addition, when trading at the end of the day you have the opportunity to trade as many as 20 currency pairs, and with such a number of instruments signals will always be found in abundance. Can you trade the same number of pairs intraday at the same time? Naturally not, it is physically impossible to keep track of everything within tight time limits.

Just 20-30 minutes a day is quite enough. You do not need to stare at the monitor all day, it will not affect the price in any way, and you still look for new entries only after the current daily candle closes. Personally, I also look into the terminal 2 times a day (I cannot overcome my curiosity), but in fact this is unnecessary. Half an hour a day after the daily candle closes is more than enough. This is also convenient because you do not need to be distracted from your regular work. Trading becomes something like an evening hobby with decent earnings.

I do not know why, but beginner traders have this feeling: "faster, faster, open positions as soon as possible and more of them!". As if Forex will shut down in a week. The currency market will exist as long as money exists, and opportunities to open trades will always be there. Now, and in a year and in 5, 10 years.

Forex is a big mechanism where huge amounts of money rotate, and from the fact that you blew up your account scalping on minute charts, nobody feels hot or cold. The market does not care about you. Therefore do not rush, there is no need to urgently climb onto minute charts right now, you will be able to open a trade tomorrow and the day after tomorrow, and in a month.

Wait for a good opportunity to enter the market on daily charts and only then open orders. I say once again: THERE IS NOWHERE TO HURRY.

Which strategy should you trade on daily charts with? I want to draw your attention to one point: it is very important to choose a broker with the correct server time. Otherwise you will not always receive the correct entry signals.

As for the trading methods themselves, here I can advise first of all Price Action.

In general, almost any strategy can be adapted to daily charts, it is enough to adjust the take-profit and stop-loss values. And sometimes the rules too. But that is already a topic for a separate article.

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Sincerely, Vlasov Pavel Tlap.io