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Choosing the Time Frames in Forex Trading

BY: John Fastland | Category: Finance | Submitted: 2010-08-19 03:45:23
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Article Summary: "One of the most important questions all forex traders have to ask themselves before staring actually to trade is what time frames they feel most comfortable with. These can be either short-term or long-term time frames..."

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One of the most important questions all forex traders have to ask themselves before staring actually to trade is what time frames they feel most comfortable with. These can be either short-term or long-term time frames. This question is important in relation to the choice of the most suitable forex trading strategy. What is crucial is that there is no single "proper" timeline for forex trading. Any individual that trades currencies should remember that trading in the forex market turns out to be money-making both in short-term and long-term perspective. It means that a forex trader can adjust his/her trading strategy to the timeline he/she has chosen.

To start with, the issue of the time frames is closely connected with the type of forex trading - whether this is trend trading of counter-trend trading. It is important to mention that if a forex trader is basing on the trend, it is preferable to work on the longer timeframe. It must be noted that it depends on the fact that usually it takes a long time - not days, but often months, actually - for a forex trend to develop. While if he/she prefers counter-trading, it is better to start form a shorter timeline, since quick turns in the forex market sentiment generally happen in short periods of time.

For example, it is considered that the most effective way of forex trading on the short-time frame is basing on the hourly charts with risk/reward aims of at least 30 pips on average. Any smaller trades have proved to be inefficient and thus unprofitable.

In general, the timeline is the principal choice that every forex trader has to make. Perhaps it would be a wise idea to try both types of time frames in trading before choosing the one that suits you best. You should keep in mind that there is no evidence that a short-time frame is more profitable than the long-time frame, and vice versa. Make the most of the advantages that both types can offer.

But whether you are short-timer or a long-time forex trader, you have to choose the forex trading strategy that you feel most comfortable with. Only in this case you are likely to succeed in the forex market. Mo matter how sound your approach is from the objective point of view, if trading it in forex doesn't bring you comfort and satisfaction, you should better choose another one.

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