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What is the right time frame for you? Well, it all depends on your personality. You have to feel comfortable with the time frames you are trading in.
Ask yourself the following question: Are you a scalping, short, swing, position or long-term currency trader? How many hours you want to dedicate to forex trading? You have to find out before you can choose the right timeframe to trade from.
It is a fact that many forex traders find the right timeframe through trial and error. For example, while testing systems or strategies in different timeframes, a trader can compare their performance and then choose the most accurate and profitable timeframe to trade from.
Timeframes can be categorized into 3 main types:
1. Intraday
2. Swing or Position
3. Long-term
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Intraday Timeframes
Scalpers - The scalper profits from small currency price changes holding positions just for seconds or minutes. They repeatedly buy and sell several times a day, usually in larger lot sizes but with small profit margins. the typical objective for a scalp trade is 4-15 pips. They usually love trading key economic data releases to make quick profits from it.
Preferred time frames for scalpers are 1 min, 5 min and 15 min chart.
Daytraders - The currency day trader buys and sells positions throughout the day, profiting from short-term trends, the typical objective for a day trade is 15-100 pips. Day traders tend to be range traders, buying a currency pair low and selling high. Most online currency traders are day traders. They usually use technical analysis to make trading decisions.
Preferred timeframes for day traders are 5 min, 15 min and 60 min chart.
Swing or Position Timeframes
Swing traders - Swingtraders are trying to buy low and sell high, the main difference between swing - and daytraders is the length in holding the open position, typically, swing traders will hold their open position(s) 2-5days. They usually use technical analysis to make trading decisions.
Preferred timeframes for swingtraders are 60 min, 240 min chart and daily chart.
Position traders - The main difference between a position - and swing trader is that position traders will normally have a longer time horizon than swing traders for holding a position in a currency pair, typically, position traders will hold their open position(s) 5-50days. They usually use both fundamental and technical analysis to make trading decisions.
Preferred timeframes for position traders are 60 min, 240 min chart and daily chart and weekly chart.
Long - Term Timeframes
Long-term traders - Long term currency traders usually hold positions for month or even years profiting from a long term trend. They usually use both fundamental and technical analysis to make trading decisions.
Preferred timeframes for long-term currency traders are daily chart and weekly chart.
Picking the Right Timeframe
Below table might help you in choosing the right timeframe.
| Timeframe |
Description |
Advantages / Disadvantages |
| Intraday |
Designed for active currency traders, such as the scalper and the daytrader. Timeframe's usually used to trade are 1 and 5 minute for scalpers and 5-15-60 minute for daytraders.
Trades are typically held for minutes (scalpers) or couple of hours (daytraders). Intraday traders will close their positions before market close (5 PM EST) |
Intraday trading can be very stressful, whether it's scalping or daytrading, the trader needs to set aside dedicated an uninterrupted work. You will have lot's of intraday trading opportunities and no overnight risk or rollover fees.
Scalpers and daytraders are the real deal. This is what they do for a living. Usually, they don't have a second job. Most online currency traders are intraday traders. Both scalpers and daytraders will keep a close eye on key economic data . Make sure you have an Economic Data Release Calendar on your trading desk! |
| Swing or Position |
Designed for the less active currency trader. Timeframe's usually used to trade are 60 min, 240 min, daily and weekly charts. Trades are typically held for days or weeks. |
If you want to trade currencies but have a job, then become a swing or position trader. Looking to your charts once or twice a day is fair enough to make your trade decisions. Less stressful compared to intraday trading. Rollover fees will affect your account since you are holding overnight. |
| Long-term |
Designed for the passive currency trader. Timeframe's usually used to trade are daily and weekly charts. Trades are typically held for several month or even years. |
Your primary income is a full time job and you don't have the time to watch your forex charts every day. Rollover fees will affect your account since you are holding overnight. Holding a carry trade might be a good idea for you. Trading long-term timeframe's require a large stop and the best approach is to be a long-term trend follower. |
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