Are High Timeframes or Low Timeframes More Profitable in Forex Trading? Which Traders Should Use Each?
One of the most important factors in trading is choosing the right timeframe, a timeframe that gives us many trading positions. One of the reasons why some traders cannot use their strategies well and cannot choose the right entry points for trading is because they choose timeframes that do not suit their style. In this article, we will compare timeframes and examine the advantages and disadvantages of different types of timeframes so that you can choose the right one for you.
How do I find the right timeframe?
If your trading style is such that you make several trades during the day and trade daily swings, or your style is scalping where you make relatively many trades per day, you should choose low timeframes such as 1, 5 and 15 minutes. However, if you want to trade large market swings and your positions may be open for one to two days or several hours, it is better to use the 30 minute, 1 hour, 4 hour and daily timeframes.
Which timeframes give us more positions to trade?
In lower time frames, such as 5 minutes, compared to time frames such as 1 hour, there are many more trading positions to trade and we can make more trades and make more profits. Another advantage of low time frames is the use of smaller stop-losses compared to high time frames such as an hour. Now, using the trendline strategy, we want to analyze one day of the market in the time frames of 5 minutes and one hour.
Trading on higher time frames
Trading in higher time frames is better suited to those with more patience. Ultimately, it depends on which time frame you can perform your trading best on. Pay attention to the example below: in a specific part of the chart, separated from the rest by a blue line, we were able to open 2 positions on the one-hour time frame, and after several hours, the price has reached our profit target.
Photo by TradingView
As you can see in the picture above, using the trendline strategy, we opened 2 positions in a one-hour time frame, a sell position and a buy position.
Trading on lower time frames
Now, we will analyze the same section of the chart on a five-minute timeframe to better understand the differences between trading on higher and lower timeframes. Lower timeframes, such as one- and five-minute charts, offer many trading opportunities throughout the day and are great for scalping strategies. Another advantage of lower timeframes is that they provide entry signals much earlier than higher timeframes.
Photo by TradingView
In the picture above, in the same part of the chart, but this time we have analyzed the market using the trendline strategy in the 5-minute timeframe. As you can see, we were able to find 5 suitable entry points, which is much more than the one hour timeframe. As a result, we have found that lower time frames, such as 5 minutes, give us many more entry points for trading and we can make more profits.
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