How to Use the Right Time Frame
Time frame in trading refers to the part of the time period used by a trader to make a trade. This fragment of time period varies, from a few minutes to several days, weeks, or months.
Consequences of Time Frame Selection
The time frame you choose will affect several things about trading:
1. Trade duration, i.e. how long a trade is made. For example, if a trader uses the H1 time frame, it means that at least trading is expected to last from 1 hour to several hours, even tens of hours. The longer the selected time frame means the longer the duration of the trade that occurs. Choosing a time frame, the trader actually chooses how long to trade.
2. Trading frequency, i.e. how much a trader trades. If a trader chooses a short time frame, of course, they will enter the market more often
3. Time, i.e. how much time needs to be devoted to trading. Traders who want to relax should choose a longer time frame
4. Potential loss, i.e. how much capital in the trading account could fall. Traders who use a longer time frame will experience a larger floating loss than using a shorter time frame. This is understandable because the potential profit also tends to be greater.
Time Frame Type
There are several time frame options that can be used in trading, namely:
- M1 (Minute, or 1 minute)
- M5 (5 minutes)
- M15 (15 minutes)
- M30 (30 minutes)
- H1 (Hourly, or 1 hour)
- H4 (4 hours)
- D1 (Daily or 1 day)
- W1 (Weekly, or 1 week)
- M1 (Monthly, or 1 month)
For example M1, meaning that the price chart is displayed every 1 minute period. So 1 candle in the M1 time frame shows price movements within 1 minute.
In addition to the standard time frames above, some online trading software can also provide custom time frames, which traders can set themselves.
Note:
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