Timeframes are one of the key factors that determine trading success. The reason for this is that each timeframe has its own trading style and risks. For example, short trading sessions. (minute or daily) tends to be more sensitive to price changes/technical indicators. But it is less affected by fundamental indicators.
On the other hand, longer trading periods are somewhat influenced by fundamental conditions and market sentiment. What is a time frame and how to use it:
What is the trading time frame?
Timeframes are the periods of time a trader takes in trading. This time period can consist of minutes, hours, weeks to months. It is important for traders to set time frames. Due to the degree of volatility in asset prices in the short term, they tend to be more volatile. So the risk is higher.
It wasn’t long before the position was opened. Traders open multiple trading sessions simultaneously for analysis. A good application or software usually comes with this multi-timeframe feature.
time frame type
Here are some of the most widely used timeframe types:
- 1 minute (M1)
- 5 minutes (M5)
- 15 minutes (M15)
- 30 minutes (M30)
- 1 hour (1 hour)
- 4 hours (4 hours)
- 1 day (every day).
- 1 week (1 week)
- 1 month (1 month)
In addition to the timeframes above, some trading software also have a special time frame setting feature that you can set as desired. and can be displayed in multiple graph windows at the same time This feature usually consists of two or three chart windows, 1 chart for long-term trends and 1 chart for short-term trends.
How to determine the best trading time frame
Setting the best time frame is the same as determining the best trading style. There are several things you should consider, namely:
1. Risk level
The first factor that you should pay attention to is the level of risk. The reason is, the shorter the trading period, the better. The risk will be higher. This is because short-term price movements of financial assets are often unpredictable. In addition, in the short-term, you cannot identify an ongoing trend, so you will find it difficult to open a trend-following position.
2. Free time
The shorter the trading period you choose. It is even more important that you have the time to observe the market. Because if you choose a 1 minute trading period, you must be able to observe minute market movements to choose an accurate trading time.
3. Trading style
Trading patterns also play an important role in choosing the time frame, for example for swing trading. You can choose daily, weekly and monthly trading sessions, while scalping only takes less than 1 day.
4. The trading instrument of your choice
Experienced traders often use multiple trading styles at once and even invest. which is used according to the type and nature of each selected tool.
For example, Trader A chooses Stocks B, C, and D. Shares B is chosen because the short-term takes place over the last 24 hours. C is chosen for the medium-term because it moves a lot of the long-term trend, whereas Stock D was chosen because this stock is a. blue chip stockmake it suitable for a very long time
However, multiple trades like this carry a high level of risk. Due to the need for capital and high concentration as well, therefore, in general Traders using this type of trading system need sufficient experience.
Trader’s mistake in choosing the time frame
1. No in-depth analysis
as mentioned above Sometimes traders may use different trading sessions for different instruments. To use this strategy Traders need an in-depth analysis of each trading instrument. Because each tool has its own characteristics. Therefore, sometimes it is not possible to have a single trading period for all instruments.
2. Not adapting to trading style and risk
Few new traders choose trading hours by default. It is not adapted to the chosen trading style and risk level. As a result, the trades they performed incorrectly and suffered a lot of losses.
3. Easily distracted
One of the challenges of trading with multiple time frames is that traders are easily distracted. So they can shift their focus from the trading session they should be. This is especially true if the trader trades on two instruments with different time frames. Therefore, there must be enough concentration and focus on controlling more than one trading instrument in the short and long term.
Do traders need to use multiple timeframes?
There is no mandatory time frame for traders. This is because every trader has to have his or her own characteristics. Generally, this feature is for analytical purposes only. This is because the long-term trend tends to indicate future price developments.
However, the risk of using it is the focus of traders who do not detach again, therefore trading using multiple timeframes and multiple assets is generally only done by experienced traders. It is recommended that novice traders use 1 period and 1 asset first. So that they can concentrate more, not get confused and minimize potential losses.