Written on 4:42 AM by ForexGen
But it really depends on your own preference as well as the way the prices move in the different timeframes.
For example, you can trade the hourly and 4 hourly charts, but what if the system requires that you adjust your stops below a trough as the trough occurs? This means that you may need to be awake at 4am to do it!
So as you can see, it depends on the rules of the system as well.
This may not be the most practical kind of set up.
Alternatively, there are systems that trade the 5 minute charts, and you do so for 3-4 hours in a row and that's it. It's a discreet period where you trade and you do it and then you stop. Then you trade again at a different part of the day or on a different day.
The consequence of this is that you need to focus during those few hours and place orders, adjust stops and profit targets etc in that time.
This may be prefered by some people as it's a discreet period of time.
You just have to find an appropriate time of the day when the markets are active and will have the movements. For example, when the US stock markets are open there is generally more activity in the currency markets invloving the USD as well, eg the major currency pairs with USD in them.
So if you live in the same time zone as the US, then this is during the day. If you live in the opposite part of the world, then this is the middle of the night.
What about the daily charts?
Yes this can be traded as well, but because the candles are bigger, if you place stops below troughs formed by daily candles, then the pips risk may be very large, so some systems therefore use a shorter time frame to place stops in this case to reduce risk.
Or alternatively, the system may not use the bottom of the trough to place a stop loss.
So as you can see, the preferred time frame to trade forex and currencies depends on:
1. Your system, and which time frame it works in, or is preferred to trade in.
2. Your preference for amount of time taken to trade and whether you want it in discreet blocks of time or to watch the trade less frequently but may have to place or adjust orders in odd times of the day.
3. The timezone you live in, and whether you're awake at the times the currency markets are active.
Charts are a significant technical analysis tool for a trader that wants to perform successful trading.
Currency charts represent a single period of time and that period could range from one minute to one month to several years.
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