Most Forex traders have no idea how or why Forex prices are moving and are making key mistakes in the way the time frames they trade. In this article, we will look at three popular timeframes and see which is the best timeframe for trading your trading strategy.
In Forex markets, all the basic supply and demand news will be shown in the price action, and then all the traders' views, so let's split the price action into 3 time frames.
The major trends in currencies lasting from a few weeks to many months and they reflect the economic and political health of the country's currency. These big fundamental changes slowly from expansion to contraction, which is why these trends last so long.
Medium term trends
While the major fundamentals prevail over the long term, in the short term, trading sentiment may raise prices far up or down, and these can be seen in medium trends within the large trend that may either be the biggest trend or opposite. These trends will typically last a few days to about a week.
The Short Term Trend
This is the action within a day and really is not a trend at all its simple random price action. In one day, prices can go anywhere, and they do.
Which is the best timeframe for trading?
From the above, it is clear that trading the long-term trends can bring you the greatest profits with the least amount of work. All you do is get in on the trend and keep it – but long-term trend that only really suits a trader who is patient and disciplined.
Trading in medium-term trends can be very profitable and requires less patience and discipline than trading in long-term trends. You can make money in both time frames and the one you choose will simply be down to your personality.
I haven't mentioned day trading yet and it is the most popular timeframe for trading, but it gives you no real chance of success. There is a large industry that sells unwanted robots and other so-called low-risk day trading and scalping strategies, but they do not make money and day traders lose out.
If you want to win at Forex trading, don't make the mistake of the majority and trade in the short term – longer term trading and you want the odds on your side and be able to make a good income otherwise .