Why you should trade different time frame charts
In this weekly video:
00:23 – It’s important to trade a variety of charts
01:00 – Different pairs have different characteristics
01:23 – Standard MT4 chart time frames
02:17 – H12 charts showed great trade setups
02:54 – No more time is needed to trade the offline charts
03:47 – Do not rely on one time frame
04:36 – High reward:risk trades
I'm going to explain why I like to trade a variety of different timeframe charts as Forex trader. Let's get into that and more, right now.
Hi traders, Andrew Mitchem here, the owner of the Forex Trading Coach. Video and podcast number 301. I'm going to explain to you the importance of why I believe it's very important that you trade a variety of different timeframe charts as a Forex trader.
It’s important to trade a variety of charts
You see, different Forex pairs, different currencies have different personalities, and they all move in different kinds of ways.
Some are very fast moving, some are very slow moving. A little bit like people in some ways. The danger is, if you rely just on either one currency pair or, more importantly, just one timeframe chart, then you could be limiting the available trades that you see.
Different pairs have different characteristics
Different pairs have different months of the year or different days of the week or even different hours within a day that are better or worse for the different currency pair.
The problem is, is let's say you just traded the four hour charts let's say. The problem is, is what happens if the four hour charts that particular day or that week are either very volatile, and they're moving way too fast, or they're very quiet, and they're just dead?
Standard MT4 chart time frames
The problem is then is you're missing out on so many potential opportunities on other timeframe charts because you might find that the four hour charts that week that you trade them, they just don't show very many possibilities.
With a standard MT4 account, the main timeframes that I trade myself are the four hours, the daily, the weekly, and the monthly. That's good, but what I've done is I've developed some software, which I give to my clients as part of my coaching course, that allows us to trade other timeframes charts on the MT4 platform. We trade especially the six hour, the eight hour and the 12 hour charts. Depending on the week, for instance last week, the 12 hour chart showed some fantastic trade setups.
H12 charts showed great trade setups
This week, the four hour charts have been showing some really good setups, and it's all depending on the nature of the market at the time. The problem is, is that you don't know in advance what next week's going to show us. What's going to be the best timeframe to trade? You don't know. When people come to me, and they say, “Andrew, what's the best timeframe chart I should trade?” I say, “Well, it depends.”
So, there is no one answer that's correct. It depends on the market at that time. That's why I like to look at a different variety of timeframe charts. But the beauty of it is, is it doesn't mean to say that you're spending a great deal of extra time trading.
No more time is needed to trade the offline charts
You see, when the daily charts change over at 5:00 PM New York time, at that same time, I can look at the 12 hour, the eight hour, the six hour and the four hour charts.
I'm looking at the daily charts anyway at that time, so for an extra, maybe 10 minutes, I can scan through those other timeframe charts and look for different trading opportunities. That's the beauty of it. As mentioned, this particular week right now, four hour charts on our forum site have gone absolutely crazy. There's all sorts of different four hour charts setting up. Last week it was 12 hour charts that were showing the best trade setups on that week.
Why? Well, it's just the different nature of the market as opposed to last week as opposed to this week. But the point of this is to say, “If you want to give yourself the best opportunity, try and look at more than one timeframe chart because just relying on one, you may be cutting yourself short and not giving yourself the best opportunity.”
Do not rely on one time frame
The beauty of the way that we trade, the way I teach and the way that we trade, is that the same principal, the same approach, the same setups, the same what we're looking for for entry and exits, are identical regardless if it's a four hour timeframe chart a weekly chart. It doesn't matter. The patterns are the same, the way that we're entering and exiting is exactly the same. It's just a case of scanning through different charts.
But, of course, because we're only looking at a trade or potential new trade at the close of a candle, you know exactly when you need to go and look at your charts. That's the beauty of trading that way.
High reward:risk trades
The other thing that we find extremely beneficial is because we're looking at those four hour charts and above the majority of the time, the reward:risk is so high on those trades. You don't even need to get a 50% win rate, you can be even lower and still be making exceptionally good returns because our reward:risk is so good.
That's another advantage for trading those slightly longer timeframe charts. Less chart time, less stress, news doesn't really matter, reward:risk is so much better, spread becomes almost insignificant and you put the trade on. You know your entry, you know your exit levels, let the market do its thing.
Hope that helps. Try and get yourself into a habit of looking at two or three different timeframe charts throughout the week to give yourself the best trading opportunity.
Once again, this is Andrew Mitchem from the Forex Trading Coach. Any questions, just send me an email: [email protected] See you this time next week.