Best timeframe each defines for himself individually, but you should pay attention to the fact that certain strategies only work on certain time intervals. And how to determine a suitable timeframe, I will discuss below.
Best timeframe for profitable trading
Timeframe is the time interval of the quotes, which are reflected in the trading terminal. In other words this time, which includes one candle or bar. If you set the timeframe to 1 hour (H1), then each bar is the change in prices over a given period of time. Each terminal has both standard and unique time frames. The most common are:
- 1 minute (М1);
- 5 minutes (М5);
- 1 hour (Н1);
- 1 day (D1);
- 1 month (МN).
There are also intermediate time intervals such as week, 4 hours or 15 minutes. The choice of the best timeframe can be done in two ways: personal preferences or in accordance with the efficiency of the trading strategy.
The choice of timeframe on personal preferences:
- М1 — Н1. This interval applies to intraday trading, that is, for positions that are opened and closed within a single day. Trade on a small timeframe is challenging and exhausting, because you need to open a large number of transactions during the day for profit. Constant monitoring of the market situation requires quick reaction to events and concentration and it’s a nervous and emotional stress. In such time frames trading in only currency pairs with small spreads is performed;
- Н1 — Н4. Medium-term trading, where the position may remain open from a few hours to several days. The most popular timeframe to trade exotic currencies;
Н4 — МN. This is the best timeframe for investment, the long-term investment. Trade according to this time interval can be combined with other activities, it is characterized by low psychological stress. Has a drawback: to open a single position, sometimes you have to wait about a month.
Professional traders work with several timeframes. For example, open a long-running positions on a monthly interval, and gradually until the position is profitable and doesn’t require constant supervision, work with intraday strategies.
For those who are already professionally versed in the timeframes I recommend to download the script (indicator), which will allow you to display multiple time intervals. Thanks to him, there is no need to jump between terminal windows that allows you to quickly evaluate the trend in the short and long term. I would recommend to use the indicator, for example for scalping strategies.
The second approach (selecting the best timeframe for the type of strategy) is rather for professionals who are already deeply know the principles of technical indicators. When creating your own trading system, it is recommended to test it on multiple timeframes to figure out where it works best. When buying a trading strategy or EA it is required to indicate which interval they are designed for.
And finally, a small comment. In my opinion, the best timeframe is H1 — H4. To assess the overall situation, it is possible to rise on longer time intervals, but the minute timeframes are not accurate because of “information noise” and give a lot of false points to the entrance. Hour timeframe is more objective, but again, I repeat, it all depends on the skill of the trader, his emotionality and tactics.