Pros and Cons Forex | Large and Small Timeframe Trading
Choosing the best timeframe for trading execution is not easy. Especially for beginners, most beginner traders will use a small timeframe as a short way or do not want to learn forex science. The timeframe here shows the length of time for each candle formed on the price graph so that you can know the historical information contained in each graph. The proper timeframe selection is dependent on the trader’s own personality. The timeframes available on the MT4 platform are M1, M5, M15, M30, H1, H4, D1, W1, MN.
Basically, all timeframes will provide the same information in related pairs. Opportunities and trading positions may vary. Most traders who already understand the needs of technical analysis, will be encouraged to use D1 timeframe (daily) when starting trading, be patient waiting for trading setup, planning a stop loss and looking for the right entry level without using a lower timeframe.
If you use large timeframes ranging from D1 (daily), W1 (weekly), and MN (monthly), you should be patient because to form one candlestick in the timeframe takes time. Looking for chart patterns, candle formations as well as market trends is just right using this big timeframe and the chances of success being bigger. Getting some pips on a big timeframe will be more than at the timeframe M5 or M1. So waiting for setup with high chance in big timeframe is more valuable than small timeframe.
But a small timeframe is not without usability. At a small timeframe will appear many opportunities every day. Starting from H1 (1 hour) to M1 (1 minute). Trader beginners usually start trading with this timeframe. Placement stop loss level will be smaller or shorter so your risk becomes smaller. Setting up trading on a small timeframe can be profitable. But the temptation to over-trade is also great and you have to strictly implement the trading plan to avoid such temptation. In addition, distortions at small timeframes can often appear on the market so that the use of confirmation tools such as indicators and technical analysis is required to confirm every trading setup.
Well up to this moment, professional traders advise the use of many timeframes to get a broad overview of the market. Large timeframes are commonly used for trend analysis, patterns and formations. While small timeframe to find entry level, stop loss and target. So the combination of both (the use of large and small timeframes) will increase the chances of a trader’s success.