What you'll learn
- Match timeframes to holding periods
- Use a higher timeframe for context and a lower one for timing
- Avoid the confusion of watching too many
The common timeframes
| Timeframe | Each candle | Typical holding period | Style |
|---|---|---|---|
| M1, M5 | 1 or 5 minutes | Minutes | Scalping |
| M15, M30 | 15 or 30 minutes | Minutes to hours | Day trading |
| H1, H4 | 1 or 4 hours | Hours to days | Day and swing trading |
| D1 | 1 day | Days to weeks | Swing trading |
| W1, MN | 1 week, 1 month | Weeks to months | Position trading |
Higher timeframe for context
A five-minute chart can show a strong uptrend that is a small bounce inside a daily downtrend. Traders resolve this by reading two or three timeframes: the higher one for the direction and the important levels, the lower one for the entry. A common combination is daily for context, hourly for the trade and fifteen-minute for the entry. What matters is that the higher one is consulted first.
Noise
The lower the timeframe, the larger the share of movement that is random. A one-minute chart is mostly noise; a daily chart shows moves that took a whole session of participants to produce. Beginners are drawn to low timeframes because they show constant action. That action is expensive to trade, because the spread is a large share of each small move, and it is hard to read.
A starting choice
Trade the daily and four-hour charts to begin with. Moves are larger relative to the spread, decisions are fewer, and the patterns that the rest of this course describes are clearer. Move down in timeframe only when you have a reason and a record.
Key takeaways
- A timeframe sets the holding period and the noise level.
- Read the higher timeframe first for context, the lower for timing.
- Low timeframes are mostly noise and expensive to trade.
- Start on daily and four-hour charts.
Knowledge check
Trading forex, CFDs and other leveraged products carries a high risk of losing money. This lesson is general education, not advice. Risk disclosure.