In our work , whether you are a trader or an investor, the aspect of time analysis is very important. Yes, today this post will talk about the types of timeframes for trade / TA and the criteria associated with the choice of timeframes.
Timeframe is the period of grouping of quotes (orders) with the alignment of the price chart elements (candles, bars or whatever you like). Typical values on almost all platforms are values of 5min, 15min, 30min, 1h, 4h, 1d, 1n, etc. Experienced traders can easily navigate in this diversity, but beginners or say long-term investors sometimes get lost or simply do not understand what time periods to choose .
Just want to say about two things:
1️⃣ Try in your work different time intervals, in order to determine the most comfortable style of trading for your character and temperament.
2️⃣ Never dwell on only one or two timeframes, because you will miss a piece of information, believe - a valuable information.
Thesis will go over the first point. You want to know more - you can click the button at the end. Traders on the stock exchange are conditionally divided into groups and each has its own preferences for timeframes:
Scalpers. These guys have to work quickly taking away profit from profit in small parts, closing the deal in a volatile market at times for minutes (up to an hour) and go further to look for new opportunities. Therefore, their choice is 5 minutes, within which there are a lot of patterns and risks are minimal.
Day Traders. By the name it is clear that these are those who work during their trading day, i.e. Do not leave open positions until the next time (for crypto traders this value is very arbitrary). Therefore, for such players to cover the daily movement of the choice will be 15m - 1h timeframes.
Players who prefer short-term trading are usually focused on holding positions from 1 day to a couple of weeks. Most often for the analysis of such time periods the most informative will be day time and hourly (1h - 4h) timeframes.
Investors (medium / long term). A momentary small profit does not interest them, the approach to making trade decisions is global, i.e. relying on the style of trading in large with the expectation of a significant profit, their choice for analysis is the older timeframes (1d - 1n).
This division into categories is conditional, since many people, for example, dealing with short-term trades, have a long-term portfolio.
Generalize.
- Analysis of older timeframes gives an understanding of the overall market situation and the zone of intentions of major players.
- The averages are necessary to identify the turning points + they often show confirmation of the conclusions made at the senior timeframes.
- Analysis of small time intervals gives us ideal entry / exit points.
Rule (especially for beginners) - Analyzing the tool always start with the older timeframes and end with the younger ones. Always and never vice versa! Those. if, for example, you are a short-term trader and the main timeframes you have watchmakers, then you need to start the analysis one day higher - the daily (1d).
In the end, also a couple of words about the additional criteria for choosing a timeframe:
Trading strategy - depending on the type, there are recommended timeframes (for example, those who are still in their system of indicators know at what periods they "work" best)
The size of the deposit - eeh, with a small deposit, you simply can not trade above 4-8 hours, because collide with the discrepancy between the rules of money management and the size of SL.
Trade time allocated - everything is simple! Either you are a trader and devote yourself to it completely, or if you combine trade with something else (with other work, travel, etc. or Bounty😏) - you are an investor.