Moving to the Higher Timeframes (recommended)

Filed under: Learn Forex Trading |

Screen shot 2013-03-08 at 10.11.50It seems that beginners to the forex markets are always drawn towards the lower timeframes (such as the 5-minute, 15-minute, 30-minute, 1-hour, and 4-hour timeframes). This is probably because new traders have not learned the importance of patience, and want to make as much money as possible in a short space of time. There is also a tendency for beginner traders to chase losers (which they will inevitably have). As such, beginner traders tend to neglect the higher timeframe charts (the daily and weekly charts), as these do simply not provide enough action for their entertainment needs.

 

But the forex markets are not there for people’s entertainment (and if that is why you trade the forex markets, then you will more than likely lose money); and if you want to be profitable, then to begin with at least, I would recommend trading the daily timeframe only. Why is this?

 

Well, there are a number of advantages of using the daily timeframe charts. To begin with, the support/resistance levels are much more reliable. This is probably because a lot of professional traders use the daily timeframe charts, and as such, more people are looking at the same levels. To add to this, the spreads are also less of an issue on the daily timeframe charts (which is not to be taken lightly), and you also have more time to think and make trading decisions (which is important for beginners), as the market moves slower (relatively – not actually!). The more I trade the forex markets, the more I am drawn to trading only the higher timeframe charts. This is because my trades on the higher timeframe charts have a much higher strike rate, and therefore a much higher probability of success. So if you are a beginner, I would highly recommend looking at the daily timeframe candlestick charts – only!

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