Which Timeframe Should You Trade?

The success of a trader does not rely on the trading plan and strategy alone. It should compromise with the right personality of the trader and the proper timing for making the trade. This is called the timeframe.

New traders often want to make a quick trade. It seems that they are not patient enough and can't wait enough to trade. The most common timeframe that new traders use is the 1 minute or the 5 minutes chart.

Often times trading using a very short timeframe makes traders frustrated. The reason: they traded with the wrong timeframe for the kind of trader that they are.

After trying hard to trade with very short timeframe, traders now move forward with trading using the 1 hour charts. Yes, the timeframe seems to be longer this time but not long enough for some traders.

With the one hour chart the signals are not always clear and there are only very few signals to rely on. Some traders do so with using only 1 hour charts while others need more time to analyze the market.

Do not rush yourself in making the trade. There are traders that can't trade using the one hour charts alone. Some really need timeframes that are longer, while some need shorter charts.

Some may think that trading using the one hour chart is too slow, some prefer using 10 minute charts, and this should give him enough time to decide on his trading plan.

Now you might wonder what timeframe is the right for you. Well, the truth is that it depends on what kind of personality you have. There are three types of timeframes: long-term, short-term or swing and the Intraday or day-trading.

Timeframe: 1. Long-term - this means that traders prefer using daily and weekly charts. This means that weekly charts establish a long term that assist placing entries and perspective.

Advantage: one of the advantages that you can gain from long term trading is that you do not have to watch the market everyday. A second advantage is that it has fewer transactions; this means that you are going to pay less of the spreads.

Disadvantage: large swings needs large stops, traders only trade about 1 or 2 times a year having a good trade, so you will need a lot of patience. If you have a big account it means that you need to have a longer term swings. You also have losing months. 2. Short-term - traders use this chart hourly.

Advantage: this means that traders will have more opportunities for trading; they also have less chance of months losing.

Disadvantage: your transaction costs will be higher because you have to pay more spreads. There is also a higher overnight risk factor.

3. Intraday - this means that traders use 1 minute or 5 minute charts.

Advantage: traders will have lots of opportunities for trading, and there is no overnight risk.

Disadvantage: again the transaction costs will be higher. This will be more tiring mentally since you are dealing with every day trades. Your profit will be limited only to a day to day basis.