Which Time Frames Should You Use in Forex?

Choosing the right time frame to trade Forex depends, mainly, on the Forex System you’re using. If you’re a short-term trader, then shorter time frames such as 5 minutes, 1 hour or 4 hours should be used. If you’re a long-term trader, then daily, weekly or even monthly time frames are more suited.

It sure seems simple; but there’s more into it. If you want to be a step ahead of other Forex traders, you should become familiar with a concept: multiple time frames. Trading multiple time frames basic idea is that instead of you looking at just one time frame when you’re trading a currency pair, you look at other time frames of the same pair. This will give you a better idea of whether you should enter or exit the trade.

Usually, Forex traders tend to use 3 different time frames. The first time frame they look at is the one they actually use to determine if there’s a trade or not, and they use one lower and one higher time frame. So, for example, let’s say you’re a short-term trader and that you normally use the hourly chart for your trading decisions. This should be the chart you look at first. Then, you probably want to check out the 15 minutes as for your lowest time frame and the 4 hour chart for the longest. If you notice, these time frames express the “rule of four”, and this is usually how you select the time frames to use.


The Longer Time Frame

The longer time frame is many times described as the “big picture”. It’s this time frame in particular that allows you to see if there is any prevailing trend (remember that the larger the trend, the stronger it is). As the old saying says, “the trend is your friend”, and if the trend is going up, you should only look at buying opportunities. This will ensure a higher success rate, rather than trading against the trend.


The Main (Intermediate) Time Frame

This is usually the time frame you used to look at first and it will continue to be the time frame you look at more carefully. It’s by looking at this chart that you will actually decide to enter and exit your trades.


The Shorter Time Frame

You can call the shorter time frame the “execute time frame”. When you already have the big picture and you decided it’s a good idea to enter into a trade or to exit one, the shortest time frame will give you the best entry and exit prices possible.


Bottom Line

When a Forex trader decides to use multiple time frames, he isn’t complicating the system; he’s putting the odds on his side. Only by using multiple time frames you’ll be decreasing the risk since you’ll be able to easily spot strong supports and resistances as well as you’ll have stronger entry and exit prices.