When we start trading, it will open a trading platform like Metatrader where prices in the forex market are displayed in graphical form. Forex charts illustrate the price movements of a currency pair on the forex market, whether the movement is up, down, or static. However, in practice, our observation of price movements will also be affected by Time Frame. Therefore, before analyzing price movements, we must first understand the matter of Time Frame in forex.
Definition of Time Frame in Forex
Time Frame in forex is a certain period of time determined as a period of observation of price movements. At different times, the price conditions displayed can be translated differently. For example, for example, the EUR / USD currency pair weakened over the past hour, but strengthened in the past day. All of this will appear on the forex chart, if we change the attached Time Frame.
According to practical terms, forex charts are formed from data on price movements collected in certain time frames. Therefore, if the Time Frame is changed, the price movement data can change. For example, consider the comparison of price movements in EUR / USD in the 1 Hour Time Frame (Hourly / H1 / M60) and the following 1 Day Time Frame (Daily / D1).
On the Candlestick chart in 1 Hour Time Frame, each candle describes the movement for 1 hour (opening, closing, high, and lowest prices). Whereas in the 1 Day Time Frame, each candle describes the movement for 1 full day. The Time Frame Unit shows the length of time it takes to form a candlestick; so the graph will vary depending on the Time Frame.
The Time Frame unit in forex is most often used, namely 1 Minute (M1), 5 Minutes (M5), 15 Minutes (M15), 30 Minutes (M30), 1 Hour (H1), 4 Hours (H4), 1 Day (D1 ), 1 Week (W1), and 1 Month (MN). On a trading platform, there are usually several Time Frame options available, and we can move around to determine which Time Frame is more suitable for use in forex trading activities.
Choosing a Time Frame in Forex
Choosing Time Frame in forex is easy and difficult. In general, traders choose based on the trading system used. Example:
1. Scalping System User Trader.
With a scalping system, traders can open and close transactions quickly, or even just a few minutes. Therefore, traders like this usually use the M1, M5 or Maximum M30 Time Frame.
2. User Trader Day Trading System.
As the name implies, "Day Trading" means opening and closing forex transactions on the same day. For Day Trading, Frame Time M30 is usually used up to H1, plus H4 or D1 as the comparison Time Frame.
3. User Trader Swing System.
With the Swing system, traders may open and hold transactions up to several days, weeks, even months. Therefore, the Time Frame used ranges from H4 to W1 and MN.
Every trader can trade using one Time Frame or more. Low time frames are usually considered to contain too many annoying fluctuations, while a higher Time Frame is considered to describe the overall price trend better. The effort to choose Time Frame in forex also considers these factors.
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