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What Is the Best Timeframe to Trade Forex?

November 10, 2014 by Andriy Moraru

Is there such thing as the best timeframe in Forex trading? I do not think so, but there are some rather important properties of trades that change significantly with the chosen length of timeframe. This creates conditions for preference depending on one’s trading style, personal traits, money management system, and goals.

Lower timeframes offer more trading opportunities. Increased number of trades leads to increased spending on bid/ask spreads. Lower timeframes also provide a faster response to trader’s decisions, making them better suited for anxious traders and traders relying on intuition. It is more difficult to apply proper position sizing techniques and to keep a trading journal when trading on such timeframes.

Higher timeframes offer fewer entry opportunities, but the size of potential profit is usually significantly higher compared to the spread size of the broker. Low density of trades allows for better preparation in terms of risk assessment and position size calculation. It also means that a trader can spend more time on logging the trade and its outcome as well as on analyzing the results.

The timeframe choice depends heavily on the trader’s goals. It is unwise to use long-term strategies if your goal is to get a positive result with at least several trades every month or every week. Likewise, it is probably a poor idea to lose significant amounts of capital to spread and commission if you plan to trade many years and only aim for consistent yearly returns.

I prefer long-term trading and mostly look for trades on daily timeframe, sometimes switching to H4 and W1 for reference. And how about you?

What is your favorite timeframe?

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If you have some details about your timeframe preferences that you would like to share with the community, please use the commentary form below.

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