What is the Best Time-Frame

to Trade Forex?

Different Forex traders prefer different time frames and the simples answer is that you should trade those time frames that you are most comfortable with and you have had the most success with.  But let us take a look at the time frames in more detail and look at the advantages and disadvantages of each.

The main difference in the time frames (whether from a tick-chart, which represents the real-time movement of the price of a currency pair, all the way up to a daily chart, which represents 24 hours time, or even larger windows also) is how much time is being measured by the charting software.  What is going on with the currency is always at work and the price is always moving, only the time window that is selected will compile the data and tell you how much the move has been during that amount of time.  A five minute bar, for example, will give you the details on what has happened with the price over the last five minutes and represent it as either an increase or a decrease, and then also what the total move up or down is.

Generally, it is not advisable to trade time frames less than 5 minutes simply because the moves are happening too quickly to plan for and roll out a trade plan on.  On the other end of the spectrum, some traders will prefer to use daily charts.  So what is the big difference?  For starters, the amount of ‘money’ that can be made or lost will be larger on the larger timeframes.   This is because the larger timeframes take more time into account and the price has the opportunity to move further in a longer period of time.  On the shorter time frames the price action is more muted because there is generally only so far that the price can move in a relatively small amount of time.

Most traders will test out using a number of different time frames and then find themselves setting into some patters.  Other traders, however, may look at multiple timeframes on each currency pair to open up the greater number of options.  Regardless of which approach is chosen, opportunities about each and every market-open day in the Forex market.  Select the best time frames for you according to the Forex trading strategy and method you are employing.