Saturday, March 22, 2008

What is time frame?

The measurement of time in analysis. Can be in periods of minutes and hours or daily, weekly, monthly and yearly either way Time Frame must be specified. It can also be more generally referred to as Short, Medium or Long Term. In forex trading software platform you will find that the charts are divided in several set of time frames i.e. 5, 15, 30 minutes, 1 & 4 hourly, daily, weekly, and monthly. By dividing the chart it provide the flexibility of analysis for traders either they want short, medium, or long-term.

Don't be confused even though there are divided this way actually the chart is inter-connected with each other. The lower time frames i.e. 5 minutes is actually the zoomed-in version of the major time frames. And Monthly time frame is simply the general display of all the time frames. Using candlestick chart we can simply explain by taking 1 candle equal to 1 month of movement that is consist of 4 candlesticks of weekly time frame as 1 month is equivalent to 4 weeks.

Why important to understand time frame?

Perhaps one of the the ultimate achievement of every technical trader is being able to master the all time frames available. This is very important in order to success especially if you are short-term daily traders. You will be able to see the details and the bigger picture of the market directions. For example if you are 15 minutes trader you will have to look for 4 hourly or daily time frames to look for the overall positions and directions of the market. This will gives you the overall picture where will the big movements will be heading to after all small fluctuations are done.

Higher Time Frame Increase Chances of Success

Most traders do not want to get themselves involve in complicated situation especially the multiple time frames. Still they being able to have great success in trading by using only a single time frame. Yes this is possible!! By looking at the big picture of the market using the higher time frame such as daily, weekly, and monthly. This is the method used by the long-term traders who relied on trend to make decision which usually bring them healthy successful trading career.

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