- Tuesday, May 07, 2024
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Using various timeframes in Forex can help a trader locate potential opportunities to enter a trade. Many beginners don’t realize the importance of timeframes and its relation to trading styles. As a result, they make wrong choices by selecting the wrong holding period and trading styles. Because of this attitude, they lose a significant amount of money in trades. It is essential to acquire a good understanding of the duration of different trading styles.
Many people classify the holding period in three different frames – short-term, medium-term, and long-term. These have been developed based on the amount of time a trader retains their purchased assets for. Professionals use all these three at one trade to get a better view of the market, the entry and exit points. It is considered that the shorter period is an excellent choice for identifying the entry points. Here is the classification –
The preferred trading style is – position trading. The trend timeframe is – weekly, and the trigger duration is – daily.
The preferred trading style is – swing trading. The trend timeframe is – daily, and the trigger duration is – every 4 hours. As a novice trader in the United Kingdom, selecting the medium timeframe can be a great choice. Remember, options trading is all about precision. So, never rush while taking any decision in trading.
The preferred trading style is – scalping and day trading. The trend timeframe is – hourly, and the trigger duration is – every 15 minutes.
Many people think that changing timeframes affects trading badly, which is not the case. The reality is switching the holding period has multiple benefits. For example, because of the sheer liquidity of the currency exchange industry, the investors can notice that the short-term style provides more detailed information about the fluctuations, and the information will be meaningful.
Another advantage can be enjoyed because of the 24 hour operations. Since the platform remains open for the entire day, even a newbie can switch to a longer period to change his trading style.
Newbies become confused at this stage because they don’t understand which one can be better for them. While choosing the holding period to hold an asset, a novice should choose the longer. Still, selecting a good timeframe always differs based on the capacity of the beginner. If he realizes the technical indicators well, he can choose to trade with a shorter period. Professionals always suggest that novices select the technical chart, which seems to be comfortable for them.
There are multiple business styles that fit different frames, and some of them are –
As mentioned earlier, this method is suitable for the medium-term duration because a trader must hold the currency for such a period, which ranges from a few hours to days. Therefore, it is neither a short-term nor a long-term method. Forex business people generally wait for a swing to execute their deals.
This is actually a long-term method, in which the beginners have to hold the currency for a more extended period, which may range from a few weeks or months. Sometimes the duration often goes on for a few days. To execute the deal, they must wait for a considerable trend.
Both methods are long-term styles, and a novice must hold his bought financial instrument either for a few seconds or a few minutes. This strategy is highly stressful because they must make a quick decision in a short time.
Using multiple timeframes is becoming popular among experts because it can reduce their stress and increase the chances of making greater profits. Use the long-term trend to find opportunities and use the short-term trend to identify the entry points.
