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What Is The Best Time Frame To Trade Forex?Mid-Term Trading

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Day trading, scalping, and high-frequency trading, etc. all short-term trading. Short-term trading is commonly done by individuals who end all their trading activity at the end of the day to receive some regenerating sleep, without worrying about what is currently going on with the market and their investments. Furthermore, short-term trading suits individuals who tend to be more impatient, have plenty of different trading ideas and love to turn those ideas into numerous positions. The goal of short-term trading is that various smaller profits turn into a big profit at the end of the day. The frequency of trades is rather high, while the position size is relatively small. Thus, as long as the majority of your trades are profitable, you will end up making money.

Short-term traders often use the daily chart as a broad overview of the trend. Then, experienced day traders usually go from the macro to the micro. Consequently, they typically monitor the 4-hour, 1-hour and 15min charts. For example, if a day trader recognizes the confluence of many different indicators showing bullishness for the daily chart, he could look out for bullish and bearish arguments in the 4-hour chart. If he has found more bullish arguments than bearish in the 4-hour, chart he could watch out for the same confluence in the 1-hour chart. If the 1-hour is also bullish, he could wait for the 15min chart to have a perfect entry-level for a long position. This could include touching oversold regions in the RSI, a bullish crossover in the lower part of the MACD as well as reaching down to a support zone.

This is important to realize because the higher the timeframe, the bigger the relative volatility. If the daily chart indicates that a bearish candle is about to be formed in the near term, it would result in a massive series of bearish candles in the 15min chart. If you would only trade the bullish arguments in the 15min chart without looking at the daily chart, you could make massive losses although your initial analysis was correct in the 15min chart.

Therefore, having a broad overview of the higher timeframes enables day traders to minimize the risk of their trading activity.

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