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Always trade in the higher time frame

Posted September 13, 2018 by EasyFinance.com to Investing 1 0

There are many styles of trading in Forex and most people try to trade with the lowest time chart. It is because they get to think the market is volatile and it is perfect for their trades. What they do not realize is it is the same trend that is showing in a lesser timeframe. If they only see the same trend in a weekly chart or daily chart, they would have realized that the market is not as volatile as it seems. This article will tell you why going below the one hour time chart is risky for your trades. You not only take risks but there are also chances of messy decisions. This article will explain all the possible reasons and we believe it will also help you in redesigning your strategy.

False spike

Some traders often complain their trades are being stopped out due to the false spike. At times the low-class brokers tend to manipulate the price so that they can wipe out the open orders with tight stop loss. To avoid such situation you must trade the market with a classic broker like Rakuten who have a strong portfolio in the financial industry. But by choosing a reputed broker you can’t ensure your profit. You need to focus on the daily and weekly time frame.

Identify the trend

Those who are making a consistent profit are trend traders. You can’t make any progress unless you trade the market with the trend. The senior traders of the premium Forex broker always suggest using the simple tools to identify the market trend. For instance, you can easily find the long-term trend by using the trend line tools. Those who rely on indicators can use the 100 and 200 SMA. If the price of a certain asset trade above these SMAs, consider it as uptrend. Similarly, when the price trades below these two SMA, you need to look for selling opportunity. But things will work only if you use the higher time frame. In the lower time frame filtering the market, the movement is extremely hard and you can’t define a perfect stop for your trade.

Timeframe under 1 hour is just noise

What we have learned from our experience is if you go below the 1-hour trading timeframe, there are more noises in the chart. You will find the industry is changing much quickly and there is no way you can react and place your trades with the changing volatility. There are thousands of meaningless bars that are forming in your chart and they can misguide you. These bars are noisy and they only try to distract the traders from the real trends. If you want to place your trades, we suggest you use any timeframe more than the 1-hour time frame. It will present you with an overall view of the chart where you will get the complete information. Lower timeframe like 1-hour chart and below only plays with your mind and you are confused. They show you an aggregated data of price levels that can lose your money easily. If you want to avoid noises in your chart, the best thing to do is to trade with a bigger timeframe.

The story of the trends does not get cleared, it makes it cloudier

Another reason you should avoid the lower timeframe below 1-hour chart is, it creates a cloud of doubt around your trading strategy. You begin to question your style and also your plan and you get derailed from the perfect plan. Many people have used the lower time chart because they find it appealing. All the trends were moving like winds and it only makes the story of the Forexindustry cloudier. The moment they have realized their mistakes, the money was all gone and it was hard for them to come back. Trading with a longer time chart is a smart choice and it also makes you informed about all the information and trends.

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