One of the reasons why traders generally fail in the Forex market is that they are not aware about the right time to conduct their trading business. Do you know your personality has an important role in the time-frame you should use for the Forex trading?
Time frame is said to be the period that a Forex trader chooses for performing the trading business. The time-frames in Forex may consist of seconds, minutes, hours, days, or even months. Being a Forex trader, you might select to use one time-frame or several time frames to evaluate and track your trade for the top trading signals.
This is one of the major obstacles any new trader has to face at the time of trading the Forex market. The question, ‘What is the best time frame to use’ is somewhat complicated than you may even think. It is not at all a suitable option to denote one-time frame is better than the other without doing thorough analysis as everyone has different circumstances and objectives.
For example, you are having a day job and limited time period to remain in front of the screens. Then, you will be considering to trade on the higher time periods, which can either be daily or monthly time-frames.
On the other hand, if you have sufficient time throughout the day to spend in front of the screens, then try to opt for suitable opportunities like scalping. You are planning to develop your trading edge over different number of trades and for this, you need to consider at the minute or hourly charts. Also, you need to set your own objectives at the time of choosing the best time frame to trade in the Forex market.
If you are a trader for a long time who does not like to observe technical trading signals markets all the time, then it is important to consider daily, weekly, or monthly charts. The positive side is that you have more time to spare and you do not need to worry about paying much in spreads or commission to the broker. For this, you need to have incredible amount of patience and do not allow fluctuations to drive you nuts.
If you seek to become a short-term (Swing) trader, then it is necessary to consider with the hourly or daily charts. This will provide your portfolio better chance of growth as you may take various trades each day. What’s the downside? Well, it may be an expensive option as you have different factor to consider such as – commissions, spreads and swap rates.
Lastly, you will find the Intraday traders or Scalpers. If you are an Intraday trader or the ones who like to scalp, then it is essential to consider high-action in the form of minute to hourly time-frames. This will provide you with more trading options, but it can be pricey and earnings might not be much substantial.
Another thing to take into consideration is the amount of capital on hand. Shorter time frames will allow you to make better use of margin and have tighter stop losses. On the other hand, larger time-frames require bigger stops and hence, bigger capital. This, in turn, will prevent you from facing margin calls or stop-outs.
Thus, one thing which is common in all the objectives is the desire to make money. The influential factor on which time-frame to use comes down to the psychological side of trading. Psychology plays a big role in accurate forex trading signals and bad psychology is the killer of most trading accounts.
When you conduct trading on the short time-frames, buying and selling of the one-minute or the 15-minute time period seem to be very emotional. This is because your will find money is coming in and going out of the account in such a short time period, particularly on the larger trades. You need to open a larger position with the hope for the best and then you will find how a slight movement can either make or break your Forex trading account.