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TimeFrames Newbie question?

Discussion in 'Beginners Bootcamp' started by TenPercenter, Dec 9, 2009.

  1. TenPercenter

    TenPercenter Recruit

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    What Timeframes are better?

    Why would it be more advantageous to trade the longer timeframes (like the 4hr) as opposed to the one minute? It is my understanding that if starting with a small account it is easier to keep from losing your account on the one minute because the moves seem to be smaller. Is this correct?

    I am new to forex. I understand the concept of scalping, would this be the only time to use the shorter timeframes? From a technical analysis standpoint, I have read that it is better to look at the longer timeframes because they involve more market participants (buyer/sellers) and therefore the patterns or reversals are more reliable. Is this true?

    An aside, how reliable is demo trading as to the real moves of the market? What I mean is that I have heard that the moves are inflated so the trader feels more successful that he would be in real trading. It is my understanding that the only real benefit to demo trading is in getting used to a trading desk or interface and the process of getting in or out. Some help please?

    The Forex Peace Army is a great web resource!

    Thank you

    Ten Percenter
    :)
     
  2. Ricex

    Ricex Sergeant

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    Hi,

    try not to think about one time frame being better than another as an absolute, it depends entirely on your strategy and what depth of information your looking for.

    Think of time frames like a zoom lens on a camera, you start out wide and see your price action/movement represented in 1 day candles. Zoom in to the 4hr chart and this same 1 day candle information is now shown chopped up into 6 x 4 hr candles. This view shows more detail of what happened in the trading day.

    Zoom in again and yet more detail is revealed on the 1hr charts, but it's always the same price action just chopped up into smaller chunks. 1.50 on a daily will be 1.50 on a minute chart, it moves exactly the same. You can continue to zoom in right up to what they call a tick chart which is as close as you can get.

    So the price is the same and the market players stay the same it's simply just a way of magnifying what's going on so we may be better able to understand the currency movement.

    Use different timescales to give yourself and therefore your trading a much clearer perspective on the market, ascertaining overall trend direction for example.

    Scalping is best done on smaller time frames yes.

    I agree with you about demo trading, it is perfectly fine for playing around and getting to know a platform and back testing if you need to, but I recommend learning to trade with microlots, real money, real account.

    What you lose maybe in pennies you will make up for tenfold in experience.
     
  3. Pharaoh

    Pharaoh Colonel

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    I knew something wasn't working right when I tried to scalp those 4 hour charts. :p
     
  4. Boko Maru

    Boko Maru Sergeant

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    Trading longer timeframes is sometimes easier as you don't see a lot of the "noise" you'll see on smaller timeframes. Trading the 1 minute is crazy I think. You'll get no sense of the general flow or trend of the market.

    I actually have a 5 min, 15 min and 30 min up when I trade. I use the 5 min to enter trades, but the 15 & 30 to give me a bigger picture view. Hope that helps...

    Demo trading? Well, not a big believer in demo trading, except as you said to get used to a platform. But for learning how to trade, I'd suggest trading live with micro lots (i.e. 1 micro lot $1,000 trade size equals .10 cents per pip, so if you take a 100 pip loss, you're only out $10 bucks).

    Trading demo, you KNOW you can't lose anything. Trading live, even with tiny amounts, will help you develop your psychology and emotional maturity when you trade. Plus, it gives you a real experience of execution, orders fills at your broker, etc.

    Anyway, rambling here, but just some pointers for what they're worth...
     
  5. cowmadagan

    cowmadagan Sergeant

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    If you use geometry you'll find that the more that you hug to the price curve, the more money you'll make. That means the more times you catch the peaks and sell at the valleys rather than waiting for three peaks or three valleys to go by the more money you'll make.
    If you use longer time frames, you'll miss more of the total curve, because your entry and exits will be straight lines and won't resemble the curve.
    There are two problems with attempting to get a higher percent of the curve. One is that you have to be frikken Nostradamus to predict when each peak or valley is actually occurring on these tiny time frames as much of it are caused by when some big player does some kind of (relatively) small move, so many technical indicators don't help. The second problem is that most of the time the distance from a single peak to a single valley is less than the cost of your spread from your broker.
    The easier answer is to match your personality. How patient are you? How high strung are you? How much of a perfectionist are you? Of course, if you're worried about losing $50 in a few minutes...you shouldn't be trading.
     
  6. lincolnppl

    lincolnppl Private

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    Hello
    I am an scalper.
    I usually trad ein 1 min chart and 5min chart.
    On a normal day i open 100position.
    But!!
    It doesn't mean that you just sit and open position and close and open and close.

    I am working hard, analyse the weekly chart, after the daily and so on and so on.
    But naturally i think it is the best type of trading :D
    I just wanted to tell you, i think you should take a look at the most important levels, at any time frame, i think prefer for you the scalp if you will want to sit very much time in front of the computer.
    It's not problem to me, i am learning faster, and i get more experience, and it is so exciting to investigate all the time :)
    I dont want to write a book here because then nobody read this article :D
    So If you are interested in scalping just write me, it is that i can help for you.
    Greetings Lincoln
     
  7. jake.fx

    jake.fx Recruit

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    Why most of brokers annouces that scalpers are allowed? Is there any broker that doesn't allow them? Why?
     
  8. Pharaoh

    Pharaoh Colonel

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    If a market maker doesn't pass trades on to the real market or only hedges itself against the real market every few minutes, this means that any money a scalper makes comes out of the broker's bottom line. There are a large number of brokers that prohibit scalping. The bad part is that there is no common definition for scalping. Some of these brokers say trades must be held for 30 seconds. Others say 1 or 2 minutes. A few can be 10 minutes or more. The worst of the bucketshops don't even give a definition - instead they just say that they know it when they see it, and they see it if you make a profit.
     

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