What is the best time frame chart for trading day? The answer depends on your strategy, your expectations, as well as the unique conditions of each session. Let’s summarize all the factors to consider when choosing which time frame you want.
How traders choose a time frame
Before starting to question What time frame should I use to analyze a chart, it would make sense to start by challenging time frames in general. A time frame is an expression of prices over a specific period, from one minute to one month. Depending on the frame you select, each chart item will reflect the different asset price in different moment values. For example, in the monthly candlestick chart, a candle summarizes a day, while in the daily chart it represents an hour.
Many new traders are confused with the variety of time frames. However, the explanation behind so many options is quite simple: setting the time frame goes hand in hand with each trader’s strategy and style. In this way, a dealer will rarely go higher than a four-hour chart, and the position operator will never go to anything less than an hour.
Since today we are looking for the best chart time frame for trading day, let us focus on the details of this particular approach. So which time frame is better for trading day?
Which chart is better for trading day
Day traders aim to limit all their trades to the course of a trading day. The main reason to close your positions before the end of the day is to avoid overnight interest rates, known as swaps. On top of that, daily trading is often dynamic enough to make visible gains without excessive stress.
Intuitively, you might think that the 1D frame is the best sailing time frame for the trading day. However, in order for it to adapt to several operations within that day, it will need to reduce to a much lower level. But what fame?
Ultimately, your exact choice of Forex day trading time frames depends on your trading personality. Some traders like to run fast and seize every opportunity possible, others spend hours analyzing and looking for a perfect trading setup. None of them are wrong, but before you catch up with your unique style, it might be better to stay in the middle.
One of the good solutions for balancing different time configurations is the trading of time combinations. But before we go into the technical aspects of combining time frames, let’s first establish the main differences between trading shorter time frames vs. long time frames.
Trading shorter time frames Vs long time frame
The chart is your market map, which helps you find suitable trading opportunities. Now, trading opportunities vary from Trader to Trader, depending on your style. A day trader has to focus on minor price swings and set their automated order limits relatively close to movement. To do this effectively, you must gain understanding of trading shorter time frames vs long time frame.
Short deadlines are ideal for assessing precise fluctuations during tight periods. As you can imagine, such graphics are highly dynamic, with new elements forming quite quickly. A possible disadvantage of short-term frameworks is the escalating amount of” noise”, insignificant price changes, which can often serve as false trading signals. To filter them, traders can implement a double time frame trading strategy.
Long-term frameworks, on the other hand, have to do with the big picture. By using high frames, traders can build a more forward-looking action plan and open long-lasting positions.