What Is The Best Timeframe For Your Trading?

What Is The Best Timeframe For Your Trading?

“Which is the best timeframe?”  is maybe the most common question I get every day and I want to address it finally and hope to provide some tips on how to approach the timeframe choice.

 

Higher vs. lower timeframes

Typically, traders choose between the higher timeframes (1H+) and the lower timeframes (<1H) when picking their timeframe(s).

It is very important to understand the differences between the individual timeframes so that you can pick the ones that work well for your personality type and complement your strengths.

 

Why choosing a timeframe?

You do not want to be all over the place and focusing on a certain set of timeframes usually makes for a more consistent trading approach.

Many traders make the mistake of continuously dropping to lower timeframes during their trading. Often I see that a trader says he trades the higher timeframes but then I see him lurking around the 15min or even 5minute timeframe because he wants to “finetune” his trades.

Although having a multi-timeframe approach can be helpful, it is best if you just focus on a maximum of 2 closeby timeframes. For me personally, that means that I am on the 4H and Daily and I usually never go lower when trading those two. Moritz, on the other hand, uses the 5min and 15min as his two daytrading timeframes.

In our premium Forex course, you get two systems based on the different timeframes. You can test both, see which timeframes works best for you and then make a decision together with us about your future journey.

 

 

Step 1: The personality and skillsets

First, ask yourself whether you are good at making decisions fast under pressure or if you are better at longer-term strategic thinking?

Second, are you OK with taking fewer trades and holding them for longer periods or do you need the action every day and don’t mind to get in and out of trades faster?

You can already see, the differences between the skillsets a trader needs to bring to the table differ significantly for low and high timeframes. Make sure to observe yourself and be aware of where you fit in.

Step 2: Timeframes and the emotional side

Timeframes and emotions go hand in hand and the timeframe you choose has a huge impact on how emotions impact your trading.

Are you ok with being patient and can you wait for longer periods until you get a trade or do you easily get bored when not having a signal all the time?

Do you quickly recover from losses and can move on to the next trades without being influenced or do you need time to process a loss and pick yourself up again? A huge issue many day traders have is that they believe they need the constant action but they can’t process losses fast enough and are always in reactionary mode during the day and easily fall into the revenge-trading trap.

Higher timeframe traders have time to walk away from the charts, digest a loss and clear their minds. This can be a huge advantage for emotionally unstable traders.

Also, day traders on the low timeframes must be able to focus during their trading sessions. If focus is a problem for you, then being a day trader will give you a hard time when you are easily distracted, unorganized and then end up chasing price.

 

 

Step 3: Technicals and price action

First, you must understand that you can basically trade any system on any timeframe. A head and shoulder pattern works the same on the higher as on the lower timeframes. Moving averages, trendlines, support/resistance, candlesticks or any other indicator is completely neutral and can be applied to any timeframe. It simply does not matter!

But now you might say “But I lost money using the X trading technique on the higher timeframes…” As yourself: was it really the “system” that did not work out or was it YOU that messed it up. 99.99% of the time, it’s not the system that is the issue, but the trader himself.

Where the timeframe choice makes a difference is when it comes to intra-day volatility. On the lower timeframes, things can sometimes move very quickly whereas you have a more smooth price development.

Also, news impact the lower timeframes more but you can easily navigate around or just sit out a news event on the lower timeframes.

Some traders report that they have a lower winrate on the lower timeframes, they can also overcome variance much faster. When you get more trades, losing streaks will not last as long and you get more chances to make up for it.

Finally, the spread has a different impact as well. On the lower timeframes, the spread can make up a significant part of your profits whereas the spread isn’t too meaningful on the higher timeframes.

 

Resume: Pay attention to yourself and choose the best timeframe

As you can hopefully see by now, picking the correct timeframe has to be done with caution and the “best” timeframe will be different for every trader.

The goal of this article is to highlight how the different timeframes affect a trader and how you can choose the best timeframe for you based on understanding your strengths and weaknesses.

Forex Course & Setups

  • 2 trading systems
  • For all timeframes and all pairs
  • Swing trading & day trading
  • A complete education
  • Get access to the member forum
  • New setups every week
  • Trade discussion & more
  • Active trader community

Click to read more: Forex Course

Trend Rider indicator

  • A powerful indicator framework
  • For MetaTrader 4
  • How to find trends
  • Powerful entry signals
  • Step by step trade detection

Click to learn more: The Trend Rider indicator

Watch video in full size

Comments ( 4 )

  • Shirley O.

    Just what i am looking for. Good write up. I really mind that you send this vid to my e-mail, pls.

  • Roy

    I agree with this article.
    I tried to day trade under the 4hr timeframe and i didn’t like being at my computer all the time. I wanted to trade but have free time as well to work etc. The higher timeframes really work for me, it is all about which timeframe suits you as a trader and being able to relax and not be stressed.

    thank you.

  • Mark Crisp

    It was never about “day trading” for me.

    First envision the lifestyle you want then adopt a time frame for that.
    Do you want another full-time job watching prices all day?

    Or would you prefer such a passive method you almost feel like you are doing nothing with lots of spare time?

    The short term tie frames offer more opportunity but often slippage and broker fees cut into your profits.

    Longer term these are not an issue. + it allows you to do other things with your time. More productive things. Like running another business/ Job or hiking and sailing.

  • Aurelio

    I use monthly time frame and 30 years of data 🙂 Once I buy I hold for years. I am able not to do any purchase for months. My busiest month was 5 purchases I guess 😀

Post a Reply

1 Free Trading Course
First time ever! Free Giveaway!
Get Your Free Course

Cookie Consent

This website uses cookies to give you the best experience. Agree by clicking the 'Accept' button.