It is frequently asked question by the traders, what is the best time frames for the trading? So in this article I will walk you through a few time frames you can work with.Though time frame only shows past prices and don’t pinpoint the future prices, but you can still choose them for achieving your goals.
Utilize Timeframe that Matches Your Goals
Some time, after examining various time frames, you can have conflicting views about a currency pair, because hourly and daily time frames might be showing different trends. The question is by which way you should trade it.
When you want to trade, you should build your strategies after planning the time frames. In many cases, you might benefit from utilizing multiple time period frames . BY longer time frame you would be able to see the ‘bigger picture’ of your desired currency pair. So you can get an idea about ‘general trends’ that might exist. While by shorter time frame you can plot the actual trade.
Utilize Multiple Time Frame in Analysis
You can get multiple vantage point into your desired currency pair.In case, you use multiple time frame in your analysis. For this purpose you use longer-term charts to analyze the general sentiment or trends in the currency pair, whereas shorter-term charts to enter the trade.
Which Timeframe Works Best
When you use multiple time period frames, you keep in mind that each time frame does not work together accordingly. In case you are utilizing the daily chart for reading trends and one-minute chart for entering trades. There must be a disconnect element between the two frames.
1:4 : 1:6 Ratios between the Trend & the Entry Chart is best
When you employ multiple time period frame analysis, if you want to use hourly chart, 4 hour chart would be suitable for you to grade the trend. If you want to use the fifteen minute chart, this chart will help you reading sentiment.
Building Multiple Time Frames Strategy
For analyzing trend you can use longer time frame, for example, you want to enter trades onto the base of ‘Slow Stochastic’, but just after confirming a trend with the ‘Simple Moving Average’ of 200 periods.
If the price is lower the ‘SMA’ of 200 periods, traders only want to see at sell opportunities. They will enter with ‘Stochastic’, %K & %D lines’ crossovers. If price goes up to the 200 period SMA, the traders only want to buy. They will enter into trades when %K surpasses %D on ‘Stochastic’.
So, the first thing is you identify the trend. If you want to use the hourly chart for entering your trades, then chart for 4 hours could provide you trend analysis. After getting comfortable along with trend analysis onto the chart of 4 hours, you can begin looking for our trade entries. If the trend is down on this 4 hours chars, then definitely you will look for sell positions.
You have many opportunities to sell the pair on the base of ‘stochastic’, but each sell position would not be profitable trade for you. Since multiple time frames analysis present ‘broad picture view’ so, you can properly grade trends and sentiment.