What Is the Best Time Frame to Trade Forex?

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Before you enter the market, you should choose a Forex trading strategy. Every strategy is based on a particular time frame. For instance, position traders only consider long-term periods, for instance weeks and months, while scalpers will only analyse minute charts. This means that a trader should learn what a time frame is and how to choose suitable Forex trading time frames to enter a market.

What Are Forex Trade Time Frames?

A time frame reflects an asset’s price movement within a particular period. You may alter the Forex time frames to cover five/fifteen/thirty minutes, or even a whole year in a snap. A time frame may include information about the open, close, high, and low prices of an asset for a particular period if you trade on Japanese candlesticks, Heikin Ashi, and bars, or a single price (close, open, high, or low) if you use a line. You could check the differences between chart types at TickTrader.

Is there an optimum period when you trade Forex? The answer is simple; there is no single correct choice among Forex time frames. It's all up to your approach.

Three Main Categories of Forex Time Frames

Short-term, intermediate, and long-term time frames are typical categories in the foreign exchange market.

  • Short-term periods are presented by minute and hourly charts.
  • Intermediate time frames consist of 4-hour and daily charts.
  • Long-term periods include weekly, monthly, and yearly time frames.

Longer time frames are better for spotting an overall trade setup, while shorter ones are better for pinpointing the optimal entry point.

What Is the Best Time Frame to Trade Forex in Terms of Strategy?

The strategies that a trader uses will identify which time frame they should apply to.

Scalping

Scalping implies getting in and out of the Forex market in as little as a few minutes. The traders who use this approach prefer making numerous trades over short intervals throughout the session. They aim to gain from the small price fluctuations. Therefore, scalpers utilise the shortest time frames, from 1 to 30 minutes.

Swing Trading

Swing trading involves holding positions for a few days to a few weeks, with an emphasis on using longer time frames to analyse price fluctuations and trends and to detect patterns. Since swing traders typically keep their positions open for more than a day, they utilise higher charts, typically between 4 hours and a week.

Position Trading

Position traders employ the longest periods, such as daily, weekly, and monthly, since they need to develop a big picture of the market. But in reality, the best time frame to trade Forex for position traders varies depending on the trade length.

Day Trading

Day trading is yet another type that uses modest price fluctuations during the trading day, as this method involves closing positions on the same day they were initiated. Day traders, like scalpers, often employ low time frames. However, they have more leeway in selecting periods, which are not limited to several minutes. Aside from 15 minutes, day traders analyse the market on hourly and 4-hour charts.

Multiple Time Frame Analysis

As was previously mentioned, the choice of time frames for the foreign exchange market is dependent on the strategy being used. However, it doesn’t mean that a trader focuses on a single period. Many investors use a multiple time frame analysis. The same currency pair is analysed but from the perspective of multiple periods.

In this approach, one chart is used to open a trade, the longer period helps traders analyse the market's overall direction, the shorter one is monitored in search of the best possible entry points. For example, if a trader plans to trade on a daily chart, they can use a weekly period to evaluate the overall trend and a 4-hour period to find an entry point.

Day traders usually apply the following periods that each of these categories tends to cover.

  • The Long Term: this span can be anywhere from several hours to the entirety of a single trading day.
  • The Medium Term: this term refers to a window of between 30 minutes and an hour.
  • The Short Term: day traders usually consider a 15-minute chart.

Summing Up

One of the vital aspects of efficient trading tools is selecting a frame tailored to your needs. You could opt for scalping or go for position trading if you desire flexibility. Try a free demo account at FXOpen to define the benefits and drawbacks of each time frame.

Once you settle on a suitable period, you've only just begun. Trading is a difficult job, so anyone who wants to do it to become a successful trader needs to be prepared.

CFDs are complex instruments and come with a high risk of losing money rapidly due to leverage. FXOpen UK: CFDs are complex instruments and come with a high risk of losing money rapidly due to leverage. 60% of retail investor accounts lose money when trading CFDs with this provider. You should consider whether you understand how CFDs work, and whether you can afford to take the high risk of losing your money.
FXOpen EU: CFDs are complex instruments and come with a high risk of losing money rapidly due to leverage. 81% of retail investor accounts lose money when trading CFDs with this provider. You should consider whether you understand how CFDs work, and whether you can afford to take the high risk of losing your money.