September 22, 2009

What Is The Best Time Frame To Trade Forex?

Every trader has their own favourite trading methods and therefore will be drawn to particular time frames. So today I thought I'd discuss which time frame I consider to be the best one, ie the most profitable.

It all depends on your trading strategy of course, but in my experience the best time frame to use is the 4 hour chart.

There are several reasons for this. The first reason is simply because my main trading strategy (see right for more details), which I have been perfecting over the years, generates consistent profits on this particular time frame (with the help of the daily chart for determining the overall trend).

Secondly trading the 4 hour time frame gives you the best of both worlds in that it enables you to generate the kind of profits that a lot of short-term traders are able to generate every single day, whilst ensuring that you don't necessarily have to be sitting at your computer all day long because you only need to be alert when a good set-up looks like presenting itself.

This brings me on to my next point which is that trading the 4 hour charts is a very relaxing way to trade the markets. You can analyze various different currency pairs and really take your time planning your trades. This is certainly not the case with short-term trading where you have little time to think and have to be very quick on the button to realize any gains, or minimize any of your losing trades.

This time frame is just about ideal in my opinion because you can generate winning trades of say 100-200 pips in a single day or you can let them run for a few days to capture 300-500 pips in some instances. Just one of these trades per week can give you an excellent full-time income and I think you would agree that it's much better to spend your week looking for one or two high probability set-ups on this time frame rather than trading lots and lots of positions on the shorter time frames which may only give you 10-20 pips per trade.

Also because each trade doesn't necessarily last that long (often no more than a few days at most) you avoid much of the boredom that arises when you trade the daily or weekly charts, for example. Some people like to trade the daily charts but you do need a great deal of patience. You also need to use fairly large stop losses to ensure that the price ultimately moves in your favour without being stopped out prematurely.

So as I say I personally think the 4 hour time frame is by far and away the best time frame to trade, although different time frames obviously suit different strategies.

 

 

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11 Comments on What Is The Best Time Frame To Trade Forex? »

September 23, 2009

CHEEZY @ 3:24 pm:

Once again, thanks for ur detailed explanation of the pros of the 4H TF.

In making an entry u normally wait for a pullback. In the alternative, u said one could watch the 2H TF.

I have been wondering. Is it possible to create a 2H chart on MT4? What one sees on the MT4 screen are H1 and H4.

Steve @ 5:01 pm:

Interesting , your thoughts on the best timeframe to trade.
However I am always confused as I agree that 4 hr is better, but is that the 4 hr GMT or as in the case of Metatrader GMT+2 which can give differing results.
Or is the beter time frame 1hr as that is universal.
Do you know how to change the metatrader to GMT or are you aware of another platform that uses GMT?

James Woolley @ 6:51 pm:

Cheezy,

I don't know if you can create the 2 hour TF on MT4 because I don't actually use MT4. However to be honest I don't use it that often any more anyway. Most of the time I enter a position from the 4 hour chart.

Steve,

Again I can't really tell you about Metatrader because I don't use it. However you are right about different charting providers using different time zones, which therefore results in the 4 hour candles starting at different times.

For what it's worth I use the ProRealTime charts which use GMT+1 (although you can change these settings if you wish).

Costa @ 7:03 pm:

I agree with you Mr.Woolley as the 4hr T/F avoids the noise
of the 30/15min & all the inherent yet unecessary pullbacks.
However, it also has disadvantages in respect of "late/r" entry & exit than the 1hr/30m/15m.
Would much appreciate any thoughts on this entry/exit subject.
May I also take the opportunity to thank you for the good work you are doing via your newsletter for the trading community.
Very best regards
Costa

Dex @ 10:06 pm:

I use the minute time frame. It makes movements easier to detect

September 24, 2009

Frank Page @ 12:54 am:

Thanks for this article. I agree the 4hr time frame is a good time frame to trade. However I find one needs strong discipline as the trades do not come too often.

For myself I use the daily for long term direction and look for trades on both the 4 hr and 1 hr time trames. I will not use any time frames below 1 hr because of the inherent volatility on these charts. Also I consider using the higher time frames removes many of the disadvantages of trading against the banks and big other big institutions!

Looking forward to more of your articles. Good Luck !

November 10, 2009

stew williams @ 7:53 pm:

You recommend a 4 hr. time frame. If all indicators favor a 4 hour trade and the lower time frames are going in the opposite direction, in most cases will the longer time frame prevail for a positive trade?

November 18, 2009

Marco @ 5:32 pm:

I agree 4hr tf must be the best, i lost alot on short tf's, i think brokers like newbies using short tf's.

December 15, 2009

Forex Tool Strategy @ 10:54 am:

4 hr is better than 15 minutes, at least u can get 50 pips per 4 hrs for EUR/USD

December 27, 2009

fred @ 4:31 am:

HELLO,

THANKS FOR YOUR EDUCATIVE LESSON HERE.

I USE STEALTHFOREX TO TRADE FOREX, PLS MAY I KNOW THE BEST TIME FRAME TO USE TO GET HIGH PROFIT.

THANKS

January 31, 2010

Jameen @ 4:52 pm:

Yes 4hr timeframe is the best, I should knjow Im a Swing Trader

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