No matter what financial market you work at, the question of choosing the basic timeframe is still actual. During the work at financial markets I answered that question for myself. But, looking backwards, I can say that many mistakes could be avoided if I had answered that question earlier.
What is timeframe? Timeframe is a period of forming the candle on diagram Japanese candlestick (I use this type of diagram), from the moment of entry of the first quote till the entry of the last one. Metatrader trading platform, for example, offers us for the choice several standard timeframes from 1 minute up to 1 month. You can choose any and start trading. Actually, it’s true, but here is my comment.
As a trader my first experience I got at NYSE trading by shares of American companies. That was intraday trading, in other words, opening the position in the morning you should close it till closing bell. In fact that determined the choice of the timeframe. If all the session longs for 6,5 hours it’s hard to open the position due to hour candlesticks. Also you should keep in mind that the risks in intraday trading are much smaller than in middle termed trading. The relation between trading method and basic timeframe is evident. Even if during the preparation to opening the position you study the history at big time intervals, you’ll have to open it at small timeframes. In intraday trading I used intervals M1-M15. And if in the beginning because of my inexperience I was just trading and getting some results, thinking that these intervals are enough for me, but later I felt lack of used timeframes.
Later, trading at Russian platforms I began to use middle termed analysis and, consequently, used other timeframes. These were hour-, 4-hours and day- charts. I personally like middle termed trading more. I can hold the positions from 2-3 days up to several months. Sometimes, having some global aims, I stay in the position for years, but it’s rare and is not the issue for discussing today.
For me the truth is the rule to use this trade or another strictly depending on my expectation from the trend. If, for example, I found out the situation where I clear see the prospect of the changing of the cost of active at the day diagram, for me the line of the instrument during the day won’t be that significant if I decided to open it for several minutes or hours. The same logic is for the intraday trading. If there is the potential for the next hour, I don’t use day or even 4-hours diagrams. There is a place and the time for everything, they are just useless. Don’t seek for the truth where it’s not. In trader’s work it’s vitally necessary to perceive the information exactly, accurate due to real situation. Don’t try to think over and find anything more. Certainly, nobody disputes that small intervals form bigger ones but for me it’s unpractical to find the approval of day diagram at the 5-minutes diagram.
In my posts I’m not describing the formula of the Holy Grail, of course, and truly I’m not striving to do it. Here I just share with you my point of view about different timeframes. Ready for questions and dialog. WELCOME! Comment