Forex charts illustrate the price movements of a currency pair in the forex market. The graph varies in movement between down, up or static.
In our observations when looking at the chart, price movements will also be influenced by Time Frame (TF). Therefore, before analyzing price movements, we must first understand the Time Frame contained in the price chart that we observe.
In the price movement chart, what is meant by 'Time Frame' is a certain period of time that is determined as a period of observation of price movements.
At different times, the price conditions displayed can be translated differently. In general, for example the USD / JPY currency pair weakened at the last four hours, but has strengthened in the past day.
All of this will appear on the forex chart, if we change the attached Time Frame.
In general, forex charts are formed from data on price movements collected within a certain period of time. Therefore, if the Time Frame (TF) is changed, the price movement data can be changed.
For example: price movements on USD / JPY in the 1 Hour Time Frame (H1) and the 1 Day Time Frame (D1) will be different from the chart display.
Please note that on the chart in the 1 Hour Time Frame, each candle represents the movement for 1 hour (OLHC). Whereas in Time Frame 1 Day, each candle represents movement for 1 full day (OLHC).
The TF unit shows the length of time needed to form a candlestick / bar so that the graph will vary depending on the Time Frame (TF).
The most commonly used Time Frame (TF) units in forex are:
- 1 Minute (M1),
- 5 Minutes (M5),
- 15 Minutes (M15),
- 30 Minutes (M30),
- 1 hour (H1),
- 4 Hours (H4),
- 1 Day (D1),
- 1 Week (W1), and
- 1 Month (MN).
On trading platforms, choices are usually provided with several choices of TF (Time Frame), and we can move around to determine which Time Frame is more suitable for use in trading activities depending on your type whether scalper, day, or swing trader.
So which is the best Time Frame to use?
The answer to choosing the best time frame in forex is that there is no certainty. But in general, some traders will choose based on the 'trading system' used.
If you are a Scalping Trader, use a small period TF as a priority.With a scalping system, traders can open and close transactions in a fast tempo, or even just a few minutes apart. Therefore, traders like this usually use Time Frame M1, M5, or a maximum of M30, although it does not rule out using TF with large periods as a reference in scalping techniques.
If you are a Day Trader, use medium term TF as a priority.As the name implies, Day Trading means opening and closing forex transactions on the same day. For Day Trading, M30 to H1 time frames are usually used, plus H4 or D1 as a comparison time frame.
If you are a Swing Trader, then use a large period TF as your reference.With the Swing system, traders usually open and hold transactions for up to several days, weeks or even months. Therefore, the Time Frame used ranges from H4 to W1 to the largest timeframe, MN.
Every trader can trade using one or more time frames. But basically the more TF references, the better :)
A low time frame is usually considered to contain too many disturbing fluctuations, while a higher time frame is considered to better reflect overall price trends.
The effort to choose a Time Frame in forex depends on what kind of trader you are, like a Scalper, Day trader, or Swing Trader.