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work...
Which Timeframe Should You Trade?
One of
the main reasons traders don’t do well as they should is because they’re
usually trading the wrong timeframe for their personality. New traders will
want to learn how to get rich quick so they’ll start trading small timeframes
like the 1-minute or 5-minute charts. Then they end up getting frustrated when
they trade because it’s the wrong timeframe for their personality.
Finally
after a long period of timeframe unfaithfulness, we felt we were most
comfortable trading the 1-hour charts. This timeframe is longer, but not too
long, and trade signals were fewer, but not too few. We now have more time to
analyze the market and didn’t feel rushed anymore.
On the
other hand, we have a friend who could never, ever, trade in a 1-hour
timeframe. It would be way too slow for him and he’d probably think he was
going to rot and die before he could get in a trade. He prefers trading a
10-minute chart. It still gives him enough time (but not too much) to make
decisions based on his trading plan.
Another
buddy of ours can’t figure out how we can trade a 1-hour chart because he
thinks it’s too fast! He trades only daily, weekly, and monthly charts. His
name is Warren Buffet. You might know him
Okay,
so you’re probably asking what the right timeframe is for you. Well, buddy, if
you had been paying attention, it depends on your personality. You have to feel
comfortable with the timeframe you’re trading in.
You’ll
always feel some kind of pressure or sense of frustration when you’re in a
trade because real money is involved. But you shouldn’t feel that the reason
for the pressure is because things are happening so fast that you find it
difficult to make decisions or so slowly that you get frustrated.
When
we first started trading, we couldn’t stick to a timeframe. We started with the
15-minute chart. Then the 5-minute chart. Then we tried the 1-hour chart, the
daily chart, and 4-hour chart.
Trading
timeframes are usually categorized into three types:
- Long-term
- Short-term or swing
- Intraday or day-trading
Which
one is better? It depends on....