Which time frame do you trade on?

As you would expect, the time frame that you use depends on a variety of facts and circumstances, some of which will be personal to you. The below are the typical traits and related time frames that are usually aligned.

Short-term traders

• Personality traits: quick decision makers, high tolerance for stress and probably enjoy fast paced environments

• Best suited time frames are 1 minute to 5 minute charts

Medium-term traders

• Personality traits: patient, disciplined and able to wait for setups

• Best suited time frames are 15 minute to 4 hour charts

Long-term traders

• Personality traits: patient, long-term focused and able to withstand market fluctuations

• Best suited time frames are daily, weekly and monthly charts

Is your personality and trading time frames aligned to the theory of which time frame suits you best? It is very important to really understand which time frames you are performing well and poorly on because you can then adapt your trading style accordingly.

My personality is that of a short-term trader because I enjoy making decisions quickly and am used to stress and tend not to have patience for waiting around. For me, although the number of trades I take on shorter term time frames vastly outweighs the number of trades I take on the higher time frames, such as 4 hour and daily, my trade performance and win rate is higher on these higher time frames!

When I analyse myself (trading requires you to know yourself deeply) I realise that although the traits of a short term trader do relate to my personality, as I get older, I have become a lot more patient and find waiting, including for trade set ups much easier.

The upside of being a short term trader is that there will be a lot more opportunities available, but for me, the win rates are not as good. The downside of trading the longer term time frames is a lot less opportunities. The advantage of the higher time frames is that although there are fewer trade opportunities, the price action you are monitoring is generally a lot more reliable.

Another important aspect of which time frame to trade will be the time you have available. If you don't have much time due to holding down a day job, instinctively you may consider the short term time frames are more suited to you because of the unavailability of time and the eagerness to get the experience of live trades. However, if you have limited time then consider whether you have the mental capacity to be able to trade short term time frames, as they tend to be intense and mentally draining. It might be easier to spend that available time in identifying trades on the higher time frames. You are less likely to succumb to Fear of Missing Out also.

To be successful, regardless of time frame or available time you have, being in the right frame of mind, or as they say, 'in the zone' is so important. Trading is a serious business and one of the most difficult things you are ever going to pursue.

Let's look at the challenges on a technical basis and the realities of the different time frames to trade. Look at the chart below of Gold at the end of play on 26 April. I have included the 2 minute chart at the top and the daily chart at the bottom.

Here is where the challenge starts. On the very short time frame of 2 minutes we can see overall bearish price action and the trend is clearly down. However, the daily chart shows real bullish strength. This is where zooming out comes in. Before considering a trade you would want to see the higher time frame first. In this instance, it's clear that you are going to have a bullish bias. If you are going to look for a short continuation on the lower time frames, it would be reasonable to suggest that the probability of a big move down is lower and it might be better to wait for a bullish continuation.

If you are scalping short term moves against the bias of the higher time frames then you would want to be very careful regarding your expectations of return vs the risk you are taking. Expectations is a killer in this industry and in my own experience, taking trades against the overall trend has proven costly, when I have analysed some of my losing trades. Easy done though, I am sure I am not the first nor the last person to get caught up in the small time frames and not see the bigger picture.

It is critical that you are monitoring all your trades, particularly the time frames that you are using and analysing what the results are telling you. Maybe you want to be, or think you are successful on the 2 minute chart, but are you any good at trading that time frame? If you can clearly see that for some time frames you are not successful and/or generating very poor win rates, drop trading that time frame for the next month and then monitor your results. Is your overall win rate improving compared to the previous month/s? Alternatively, if you want to continue these time frames at least check to see if you are historically going against the overall trend and that is the reason for your losses.

Data is important, if you are going to break free and make this your future, managing your win rate and constantly looking to improve it will be decisive in determining whether you fulfil your ambitions. Start journaling all your trades and getting equipped with the data to make better decisions about how you trade. Refer to my journaling page to get more details. I think it is important to know what time frame I am the best at and within that time frame, what type of asset I am best at trading, whether long or short and even which day of the week is best.

Trade Clearly!