Best Timeframe to Trade in Forex
“What is the best timeframe to trade in Forex?” Isn’t that the question that many traders, especially the novices have asked themselves?
When MT4, with just nine timeframes, was the only available trading platform for Forex retail traders, this question needed an answer. And with newer trading platforms with more timeframes today, answering this question is even more important.
By the end of this article, you should get a clearer understanding about what’s the best timeframe to trade in Forex.
Is There The Best Timeframe To Trade Forex?
Unfortunately, there isn’t. The best timeframe to trade Forex depends on the Forex trader, who has a trading strategy, trading style, and personality. All these factors impact the final choice of the best timeframe.
So, how would you know the best timeframe for you? Just read on.
How To Choose A Timeframe By Yourself
There are two common ways to choose a timeframe by yourself: the trial-and-error method and the personality check method.
You trade one timeframe and note how comfortable you are trading it. While trading in this timeframe ask yourself these questions:
- Do you think the market is going too fast or too slow? Let’s assume you want to trade the EURUSD. Do you find the market price barreling through where you would have wanted to enter the trade before you complete your analysis? Or does it take an eternity before it hits your take profit? These might be signs that the timeframe you are trading is either too fast or too slow.
- Do you always have the time to monitor your trades before the trades close? If you find that you have more time than you need to monitor your trades before they close, consider trading a lower timeframe. And if you notice that your trades close before you can monitor them, consider trading in a higher timeframe.
With the trial-and-error method, there is a relatively high chance that you would find the timeframe that works for you. However, this might take some time. Imagine trading one timeframe for weeks before moving to the next timeframe to do more weeks of trial-and-error. This brings us to the second method:
Personality check method
Before you even choose a timeframe, consider your personality and ask yourself these questions:
- How patient are you? If you are patient enough to hold a trade for days or even weeks, then higher timeframes (daily, weekly, or monthly) are your friends.
- Do you want to get in and out of trades within a day? Because if you do, lower timeframes are your option. This way you could do your analysis, enter trades, and close them before the day ends. The 15-minute, 1-hour, or 4-hour timeframes should be your choice then.
- Do you have very little time to trade? Having very little time to spend on the Forex market means that you want to get in and out of trades in minutes. Trade using very low timeframes – anything from the 1-minute to the 15-minute timeframe.
Also, knowing the best weekday to trade in Forex could help you save more time. This way, you wouldn’t waste time trading for days with poor rewards.
- How often do you prefer to monitor your trades? If you like to monitor your trades often, low timeframes are a great option for you. Choose anything from the 15-minute to the 4-hour timeframe.
But if you prefer to monitor your trade once every other day or week, high timeframes – 1-day, 1-week, and 1-month – would work best for you.
- What is your trading style? The most common trading styles are swing, intraday, position, and scalp trading. There are timeframe recommendations for each trading style below.
Before you find the best timeframe to trade, make sure you do all your experiments on a demo trade, and not a live trading account.
Best Timeframes For Your Trading Style
We recommend timeframes based on three major categories: trading style, level of expertise (beginner), and popular indicators. Bear in mind, though, that these are merely recommendations. Final decision is yours to make.
There are 7 basic trading styles. And each of these styles has its own timeframes that works best.
What is the best timeframe for intraday trading?
The intraday trading style involves getting in and out of trades within a trading day. Most intraday traders prefer not to leave trades open overnight. So, they tend to trade in the lower timeframes.
Recommendation: The best timeframe for intraday trading is any timeframe within the 5-minute and 1-hour.
What is the best timeframe for day trading?
Like intraday trading, day trading also involves making and closing trades within a trading day. Because of its nature, day traders often rely on a lot of technical analysis to make their trades. You’ll find some of the best day trading indicators day traders use in their analyses here.
Recommendation: The best timeframe for day trading in Forex is any timeframe within the 5-minute and 1-hour. Some day traders also use the 4-hour or daily timeframes to get a broader overview of the general market direction.
What is the best timeframe for swing trading?
Swing traders hold their positions longer than intraday traders, but not as long as position traders. But just like position traders, swing traders rely on fundamental and technical analyses to enter trades and hold them for days or for a few weeks.
Recommendation: The best timeframe for swing trading is any timeframe within the 4-hour to the daily one.
What is the best timeframe for position trading?
Position traders hold positions for long periods, like weeks or even years. As a result, they rely on both fundamental and technical analysis to enter positions. And since these positions last for long, the best timeframe for position trading is any timeframe higher than the daily one.
What is the best timeframe for trend trading?
Trend traders enter positions in the direction of a trend. They hold the position for as long as the market remains in their trend. You will find trends in any timeframe chart in the Forex market.
But the best timeframe for you depends on whether you are an intraday trader, swing trader, or a positional trader. Intraday trend traders study the 5-minute to 1-hour timeframes to look for intraday trends. Swing traders trade the 4-hour to daily timeframes. Positional trend traders study the daily or higher timeframes to catch long-term trends.
But before you even start worrying about the best timeframe for trend trading, it is important that you know how to identify a trend in the Forex market.
What is the best timeframe for trend reversal trading?
Trend reversal traders are always looking to enter a position when a trend ends, and another starts in the opposite direction. False trend reversals happens a lot, so you must learn to identify the true trend reversals in Forex.
The best timeframe for trend reversal trading depends on whether you are an intraday trader, swing trader, or a positional trader.
What is the best timeframe for scalping?
Forex scalpers hold trades for the shortest period. They enter positions and close them in minutes. As a result, the best timeframe for scalping in Forex is any timeframe lower than the 15-minute one.
Best Timeframe For Beginners
When trying to find their way around the Forex markets, beginner Forex traders might not even know whether they want to be day traders, swing traders, or position traders. However, the “How To Choose A Timeframe By Yourself” section above might help you make your choice.
By the way, here is a detailed guide on the best leverage in Forex if you are still unsure of what leverage to use for your trading.
Best Timeframe For Popular Indicators
There are many popular timeframes that Forex traders use. Three of them are the MACD, Ichimoku, and RSI. So, what are the best timeframes to use for these popular indicators?
Best timeframe for Ichimoku Kinko Hyo indicator
The Ichimoku indicator gives different signals, depending on your timeframe. So, the best timeframe for the Ichimoku Kinko Hyo indicator depends on your Forex trading style.
Swing traders would use the Ichimoku on the 4-hour to the daily timeframe. Position traders would use the indicator on the daily or higher timeframe.
Best timeframe for MACD
Since the MACD indicator is a useful indicator on any timeframe, the best one depends on your trading style.
Best timeframe for RSI
Just like the way it is with other indicators above, the best timeframe for the RSI indicator depends on your trading style.
Best Timeframe For Sentiment Indicators
Sentiment indicators are not dependent on any timeframe. This is because they don’t show historical data. The data of sentiment indicators depends on the particular time they were used.
Take the FXSSI OrderBook sentiment indicator as an example. The indicator only shows the open trades and pending orders for retail traders. It uses histograms to present the data.
So, is there the best timeframe for Forex trading? Unfortunately, there isn’t. Asking for the best timeframe to trade is like asking for the best shoe size to wear. Because your shoe size depends on the size of your feet. Some traders even use multiple timeframes in their trading analysis. You only have to put in the work to discover what works best for you.
Before you go, did you know that you could improve your trading strategy when you consider Forex market sessions in your analyses? Read more here.