Time frames are as important in technical analysis as self-analysis. Beginners are usually content with just one time frame, regardless of the time frame, and apply their indicators to it. If you consider other time frames, you can have a better view of the process.
One of the reasons why traders aren’t as successful as they should be is that they’ve usually chosen a time frame for their trading that doesn’t suit them. Novice traders want to get rich quick, so they go for small time frames of one minute or five minutes. Eventually they get frustrated because they started with an inappropriate time frame. In this article, we will try to show you the importance of time frames in 4 main aspects.
Your duty and choosing the right time frame
When it comes to deciding on your trading time frame, time is of the essence. How much of your day or week is spent trading? If you have a full-time job and can’t control your business, it’s best to focus on 4-hour or 1-hour charts, and even daily charts can be used for you.
But if you can keep track of your transactions despite having a full-time job, it’s best to use 30-minute charts. Also use for 5 or 15 minutes.
Which time frame is your personal character compatible with?
Your personal personality is directly related to the choice of your time frame, for example, you feel that the time frame is right for you. Because it’s longer, but not as long as we’re bored, and the number of signals seems to be enough. At this time frame, we have ample opportunity to analyze the market and do not feel embarrassed at all.
On the other hand, we have someone who thinks this time frame is too long and, in his own words, has become a fossil before he can make a deal! Timeframe is suitable for him for 15 minutes and he feels he has enough time to analyze.
No one else can trade in a one-hour time frame. Because it seems so fast. And it only works with four-hour, daily time frames.
What frame time is right for you?
Time frame where you can work easily. You’re under a lot of pressure to trade (because real money is at stake), so at least you shouldn’t let other things like your bad time frame put pressure on you. At any time frame, you need to have enough time to analyze so that you don’t feel confused and confused, and on the other hand, you don’t get bored.
In short, you need to use a time frame that fits your personality and when you have it. The best way to find the right time frame is for you to trade with as many time frames as possible and then choose the time frame that you are most comfortable with.
The amount of your capital and the choice of time frame
The amount of money you want to invest in this way is directly related to your time frame. If your account is small, then you can’t set large loss limits for it, so you must be in smaller time frames such as five minutes and one minute. Act as less harmful and provide smaller margins and stop laps.
Large time frames, as well as large targets and profit margins, require large losses that your account must withstand, and your account must not burn and be able to withstand market fluctuations.
The importance of multiple time frames in technical analysis
Once you’ve decided on your time frame for the above, you can go for multiple time frames to analyze the market.
Looking at the charts in different time frames, you must have noticed that the market can move in any direction. A moving average may buy a signal on a weekly chart and sell a signal on a daily chart. And it is possible to buy a signal in the hourly chart and sell the signal in the ten-minute chart. What should we do in the end ?!
Consider the following example to make the point clear to you
Time frame five minutes
The figure below shows a five-minute chart of EUR / USD. The market is moving upwards and since it has broken its previous resistance line, it seems to be the best time to buy.
But ! you made a mistake . See what happened next. The price has fallen sharply after rising slightly. it got bad .
One hour time frame
Now let’s look at the same chart and in the same position but in the time frame of sixty minutes. As you can see, the price of the channel has broken down, which means the market is going up. It is above the moving average, which is a reason for the market to rise.
Everything indicates that the market is rising, so we buy.
You made a mistake this time too!
Four-hour time frame
Okay, now let’s move on to the higher time frame. In the figure below, you can see the same situation in the four-hour time frame. It appears in the form of a descending channel. The currency pair has hit the top of the channel, but is still in the downward channel. The move above the moving average indicates that the market is rising, but the channel indicates a decline, although the move around the top line of the channel is underway.
See what happens. The price starts to fall after hitting the high trend line.
For fun, let’s take a look at the daily chart. Market movement is clearly declining. Low average moving prices are advancing in a downward channel. In this diagram, the trend is clearly recognizable. The last candle is turned down after hitting the top line of the channel. The market is down with all the evidence. Now let’s see what happens.
congratulations ! The downward trend continues.
What is the main point?
The dates and times of the charts were the same. The only difference was the timing of their different frames. Now can you understand the importance of multiple time frames?
When we just look at the 15-minute chart, we can’t figure out why it’s going to continue or return. It doesn’t occur to us to look at higher time frames. When the market continues or returns, it usually encounters a support line or resistance in the larger time frame.
It has cost me a lot to understand that support and resistance lines are more important in larger time frames. Trading using multiple time frames provides us with better opportunities. Beginners are usually content with just one time frame without considering other time frames and apply their indicators to it. If you consider other time frames, you can have a better view of the process.
Instead of getting too close to the market, look at it from a distance.
Choose a time frame as the mother and main time frame, for example, 4 hours, and do all your future analysis of the price on this time frame, then go in and out of the lower time frames for an hour.
In this way, you are actually validating your transactions and then entering into a transaction, thus you will have a stronger edge than those who use only one time frame.
Just keep in mind that there is enough time difference between time frames. If time frames are too close together, you won’t be able to tell the difference, so it’s useless to work with them.
Published and authored by FalconProfit.com