Timeframes

Timeframes

There are different strategies and different types of traders for example we have.

The “Scalpers” who mainly trade on the shorter time frames, and place multiple trade times a day. These people like to trade extremely fast paced and enjoy the excitement of the high-octane style, where missing seconds can leave you on a bad trade. Scalpers have a stereotype for being the least reliable and consistent form of trading.

Then we have “Day Traders” who will place and close a trade in the same day, only a few times a week. These people place a trade and go on with their day, checking up to see if it is going up to plan every so often. Day traders still must rely on great timing but have more time to analyze each setup. This form of trading is consistent and reliable, as well as being the most popular.

Finally, we have “Swing Traders” where they place 1 or so trade a week or two. They capture long swings and trade setups that will bring a lot of profit per trade. Each setup is analyzed the most, including both fundamental and technical analysis. Stereotypically this is the slowest, safest, and most consistent form of trading.

There are many other forms of traders. All these traders use different time frames when performing an analysis, but all rely on one main time frame to place their trades.

At the core, time frames are a form of measuring how often price is recorded on the chart. For example, the 15-minute chart, records where price is at every 15 minutes, same goes for the 1 hour and daily charts. This means that every 15 minutes (15m Time Frame) a new point will form on the chart, connecting it to the last point. What happens between those 15 minutes is price will move around and decide where to end at, some charts record these movements, and some do not.

The time frame that you use when trading decides how fast your chart will move. A short time frame, 1 or 5-minute chart, is going to move a lot faster than a 1 or 4-hour chart. This is because the 1m and 5m charts records and places points on the chart every 1 or 5 minutes. The 1- or 4-hour charts will do the same but every 1 or 4 hours. This discrepancy in time is useful for your style of trading, as well as your strategy and analysis.