Which timeframe to choose?
Good day, comrades traders. Newcomers to forex are faced with a lot of information: there are many strategies, indicators, training courses, etc. And one of the main decisions that you have to make is to choose a timeframe. Those. on what chart to trade? Five-minute, hourly, 4-hour? After all, I want to earn money quickly and a lot!
So what is the scale of the chart to choose? Read on and you will find out. Get ready to be surprised.
It's no secret that the most popular is intraday forex trading. Why? Everything is obvious here: people want to earn a lot of, quickly and right away. They think that they can catch all the slightest fluctuations on the charts and close at least 95% of the deals with profit. Even beginners think that when trading on small timeframes (M1, M15, M30, H1) they will open many deals, quickly train and become pros.
So, what I tell you - all this is the path to ruin. At least for a beginner.
How do you imagine a trader?
When you just start trading and think about your future career in trading (naturally with a lamborghini and a bunch of photo models), you probably imagine the image of a successful trader. Usually a person is drawn in a suit or at least an ironed shirt, sitting all day on a bunch of monitors and making thousands of transactions, while answering calls and letters from grateful investors who gave him millions to manage.
A more real picture: a person wakes up in the middle of the night on an alarm call, walks to his computer in his underpants, analyzes the daily charts for about 15-30 minutes, calculates stop loss, opens / closes positions and goes to sleep again. The next day, he only checks the market situation several times at the beginning of the European and American trading sessions, and spends the rest of his time with his family, spends it on some hobby, relaxes or is engaged in self-education, for example, reading forex books.
So, why am I telling you this: quit trading within the day! Trading on M5, M15, etc. - the lot of professionals.
Beginners should only trade on daily charts.
Yes, I want you to remember that. Think it over !!! Well, why do you need stress and lost deposits? Without trading experience of several years, you won’t earn a damn on small timeframes. Believe me, I myself was the same fool, I wanted everything at once. Will not work. You will only lose the depot, write on your vkontakte page that Forex is a scam and return to viewing funny pictures on the Internet.
Think about it: why in almost all books on trading, not only classical (when it was not possible to trade intraday remotely), but also modern, all examples are considered on daily charts? Why are even many candlestick figures called, meaning daily charts (internal day, reversal day)?
Yes, because trading at the end of the day, after the close of the daily candle, is the most profitable, cheapest (in terms of commissions to the broker) and easy way to trade. Next, I will try to prove it to you, simultaneously dispelling several myths.
On daily charts, stress is much less
Many underestimate the emotional component of success in the foreign exchange market, thinking that the whole thing is only a strategy. It’s fundamentally wrong.
Nerves, emotional turmoil lead to a bunch of mistakes, anger, a desire to recoup after a losing trade and, as a result, an even greater loss. When trading on daily charts, the psychological load is at least 3 TIMES BELOWthan with intraday trading. I already wrote about this. Believe me, after switching to the day, trading will become morally much easier.
Trading at the end of the day, you save on commissions to the broker
There is an opinion that trading on daily charts is unprofitable due to swaps. Nonsense. Firstly, swaps are both negative and positive. Secondly, it is approximately 1-1.5 points per day. It’s the same as if you entered the market a couple of minutes earlier / later. Well, you kept the deal for 10 days, let 10 points go to swaps, but in the end you earned 150 points. 150 - 10 = 140. Quite within the acceptable range.
Now think about how many deals you need to open within a day, say on the M5, to earn the same 140 points? A lot, pieces 20. And at the same time, you pay a commission in the form of a spread for each transaction, i.e. each time you give 1-3 points.
And when concluding a deal on the daily chart, we give the broker the same spread (1-2 points) only once + a small share of the profit in the form of a swap. As a result, it turns out still more profitable than intraday. But if you are so much afraid of swaps or you plan to hold positions for months, you can open a Swap-free account.
At the end of the day, trading is much easier.
Many people know this, but for some reason they don’t attach much importance - ON DAY SCHEDULES TECHNALYSIS WORKS BETTER. Yes, graphical figures work out better on day candles, the percentage of profitable trades in indicator systems is greater, there are much less “noises” that can knock out your stop loss. Open the platform and see for yourself.
In addition, when you open a position, you have time to think, weigh everything, correctly assess the situation, calculate the size of the position and enter the market without any extra emotions.
To trade on daily charts, you need a large deposit
Another myth from the category of OBS ("One grandmother said"). Some fool somewhere blurted out and let's go ... On a standard account for trading on daily charts in compliance with sane money management, an amount of $ 500 is enough. If this is a lot for you, open a cent account - anyone will find $ 50.
On daily charts, there is less opportunity to earn!
No matter how. I’ll now tell you a secret, realizing which, at one time I was very much surprised. FOR THE MONTH ON DAY CHARTS, YOU WILL EARN NOT LESS, BUT MORE THAN ITEMS THAN WHEN TRADING IN DAYS. This may seem untrue, because it seems that there are many more intrada entrances ...
But it is so. Think for yourself which is better: open 20 trades at 10 profit points or one with a profit of 200 points? From the point of view of savings on commissions, of course, 1 transaction will be more profitable, but we are not talking about that now. I want you to understand that maybe within the day you enter the market 3 times, and on the same day only 1 time on the same day, but the end result will not be worse, or even better.
In addition, when trading at the end of the day, you have the opportunity to trade at least 20 currency pairs, and even with so many instruments, signals will always be in abundance. Can you trade the same number of intraday pairs at the same time? Naturally not, it is physically impossible to keep track of everything in a short time.
Trading on a daily timeframe, you spend less time
Just 20-30 minutes a day is enough. You do not need to stare at the monitor all day, it will not affect the price in any way, and you are looking for new entries anyway only after closing the current daily candle. Personally, I still look at the terminal 2 times a day (I can’t overcome my curiosity), but in reality this is superfluous. Half an hour a day after the close of the daily candle is more than enough. This is also convenient because you do not need to be distracted from your usual work. Trading is becoming a bit of an evening hobby with good earnings.
Where are you in a hurry?
I don’t know why, but novice traders have the feeling - “faster, faster, as soon as possible and more open positions!”. As if, in a week the forex will close. The foreign exchange market will exist as long as there is money, and there will always be opportunities for opening deals. And now, and after a year and after 5, 10 years.
Forex is a great mechanism where a lot of money is spinning, and from the fact that you lost pipsing on minute charts, nobody is hot and not cold. The market doesn't give a damn about you. Therefore, do not rush, do not urgently need to climb minute charts right now, you can open a deal tomorrow and the day after tomorrow, and in a month.
Wait for a good opportunity to enter the market on daily charts and only then open orders. Once again I say - there is no hurry.
Strategies for the daily timeframe
What strategy to trade on daily charts? I want to draw your attention to one point: it is very important to choose a broker with the correct server time. Otherwise, you will not always receive the correct input signals.
As for the trading methods directly, I can advise here primarily Price Action (I trade using this method myself), as well as the following strategies:
In general, almost any strategy can be adapted to daily charts, it is enough to adjust the values of take profit and stop loss. Well, sometimes the rules. But this is a topic for a separate article.
Respectfully yours, Pavel
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