June 17, 2008

1 Minute And 5 Minute Charts - How Useful Are They?

1 minute and 5 minute charts appeal to so many traders because they can signal lots of short-term trades. Therefore they are ideally suited to traders who like to scalp the markets, but are they very profitable?

Well I've been trading forex for a good few years now and despite coming up with numerous short-term strategies that initially appeared profitable, ultimately they have all failed. This is why I still predominantly trade off 4 hour charts, using the daily charts for guidance.

I haven't once come across a consistently profitable system that uses 1 minute and/or 5 minute charts. I'm sure there are traders out there who are raking in lots of cash by taking multiple positions every day based on these charts, but I've yet to meet any of them.

The major problem with them is that so much of the data from them is just noise, and you get so many false signals during the average day that it is very difficult to make any real money. Even the very best technical indicators are often rendered meaningless when used over such a short timescale, and even if correct signals are given the subsequent move may only turn out to be just 5-10 points.

Plus you've got the spread to contend with because you will often need 3 or 4 points just to break even with a lot of forex brokers. Furthermore if you trade a lot of in-and-out positions, then it's usually only a matter of time before your broker will be on to you because most forex brokers don't like their customers making lots of very short-term trades.

I personally prefer my style of trading which involves 4 hour charts and generally will only consider adding a new system to my armoury if it uses 30 minute or 1 hour charts and above. This way technical indicators are generally a lot more dependable, and therefore profitable. Plus you can still be a daytrader if you so wish even using 1 hour charts You don't need to use the whipsawing 1 minute or 5 minute charts.

If you know of a trading system that is consistently profitable using these charts, I'd love to hear from you. In the meantime if you would like to read about my 4 hour trading strategy please subscribe to my newsletter above for instant access.



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4 Comments on 1 Minute And 5 Minute Charts - How Useful Are They? »

January 14, 2009

Tom @ 9:30 pm:

Dear James,

I am a regular reader of your newsletter. I like this newaletter and many form your own ideas. Also I agree with you about 4H trading strategy and the day trading position.
But, honestly, one thing I can't understand:
You are saying that you don't believe to success of a scalping system based in 5 or 1 minute timeframe. And you say "I have yet to meet any one of these trasders' I don't thing you are saying you want to meet in person any one of them
On the other hand, you have meet to the creater of the forex trade made AZ, mister Goerge Pilot. So,James, making so many compliments to his scalper system, are you with your self, or you are with George?!
I have read a number of emails from George as well, I also use intraday trading systems, including 10 minute time frame. You also know Bill Poulos, which sells his own scalper system (hi shows in video how he make money in 10-15 minutes - $200-250.00, taking lunge with one hand and using the mause of the computer with the other hand… have you seen him?
So, are you with George, with Bill or with your self?

Best regards


January 15, 2009

James Woolley @ 11:16 am:

Hi Tom,

I wrote this post several months ago and at that time I hadn't come across a profitable 1 minute or 5 minute trading system.

However I have to say that I am extremely impressed with George's Forex Trading Made EZ system, and have actually started using it myself. It's not perfect of course, like most systems, but it does look like it could be very profitable in the long run.

March 3, 2009

NEERAJ SHARMA @ 6:16 pm:


Dont mind u r all wrong i have the excellant strategy on 1 and 5 minute chart based on 8:2 ratio.

January 10, 2010

AytaƧ A?an @ 2:31 pm:

NEERAJ SHARMA could you please share short time frame strategies with us?

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