Best Timeframe to Trade Forex

What Is Timeframe In Forex?

A timeframe in forex means the amount of time it takes for a new candle to form on the charts. A timeframe is like a time capsule containing historical price action, for the period which it took to form. Trading on the right timeframe helps you avoid fake entry/exit signals, ultimately saving you money.

Enter/Exit Trades On 15 Minute Timeframe

If you are a day trader, then it is risky to enter a trade on a 1 minute or 5 minute timeframe. The less risky thing to do is to enter your trade on a 15 minute time frame, so you don’t trade fakeouts.

What I mean by fakeouts is you see a familiar candlestick pattern (such as bullish engulfing) and you rush to enter a trade, only for price to start falling and your stop loss is hit. Well what went wrong? the answer is after seeing the bullish engulfing pattern (which is made up of two 5 minute candles), you should have waited for a third candle to form in the uppward direction before entering the trade.

The 15 minute timeframe is best for day traders because it gives more accurate entry/exit signals, and it contains less noise/meaningless candles. Another advantage of trading on the 15 minute timeframe is that it encourages you to set a wider stop loss, so you don’t get stopped out easily

Before you open a new trade, you can do your analysis on higher timeframes such as the daily or hourly timeframes. However, when it is time to execute, you should switch to the 15 minute timeframe for entry/exit.

Some traders (scalpers) trade on the 1 minute timeframe because they want to make little profits and exit the market quickly. However, this scalping trading strategy is high risk and low reward. The 1 minute time frame gives lots of fake meaningess candles which could lead you to trade a fakeout.

Other traders (swing traders) like to trade on hourly timeframes, but this too is high risk. Swing trading requires you set a very wide stop loss, hence you risk too much on one trade.