In this episode of Truth About FX, Walter talks about choosing the right time frame to trade and the factors that you should consider. According to Walter, you should always consider your lifestyle when choosing a time frame and ask yourself “does it fit my daily schedule?”, “am I comfortable trading on this time frame?” or “is my current time frame giving me the results I want from the charts?”
Hugh also shares how and why he chose his current time frame and the importance of acknowledging your strengths and weaknesses.
Download (Duration: 06:17 / 7.19 MB)
In This Episode:
00:35 – wrong approach
01:12 – a set block
02:05 – the way it works
03:09 – what fits your lifestyle?
03:41 – really tempting
04:52 – a little crazy
05:57 – great habits to build on
What do you want to get out of trading?[Click To Tweet].
Your trading should fit in with your lifestyle. [Click To Tweet].
Trade with the timeframe you’re most comfortable with. [Click To Tweet].
Announcer: Sometimes, forex trading is a wild and wooly place to be. That’s why Hugh is here, to post your questions to Walter, the naked forex guy. Hugh’s got questions and Walter’s got the answers. Here at the Truth About FX Podcast.
Hugh: Hi, Walter! I want to find the right time frame to trade. How do I decide on this?
Walter: This is really an interesting question, Hugh. I think a lot of traders, they approach it the wrong way. They think of it in terms of “Hey, Joe trader makes a lot of money. He trades the one-hour chart so I’ve got to trade the one-hour chart.”
It’s not really that. What you want to do is you want to fit it into your life. I’ll give you a couple of examples. I have a good friend and he lives in England and he, basically, sits down in the morning and does his trading in the morning.
He looks at the lower time frames. He has a business but almost runs itself so he doesn’t have to do a whole lot in terms of his business and, instead, what he does is he concentrates on his trading in the morning.
He has that set block of four, five hours a week. He’ll sit down and watch the one-hour chart and try to lock into some trades.
Now, there are other traders who, like for example: I know another student, she’s in France and she will actually trade the four-hour candles.
The reason she does that, she can check the candle that prints before she takes her child to school. When she comes back, she has few hours and then she can check the next candle.
If you have that kind of life where you can check your charts two or three times a day, and you’re okay with trading the four-hour candles, and you’ve back tested it and it worked for you, that’ll be another opportunity.
Or, if you’re like me, you really just want to do this once a day where you sit down and you look at what’s going on. To be fair, I do it twice a day. Here in Australia, the way it works is my daily candles will close in the morning.
In the morning, I’ll see the daily candle close and it changes a little bit depending on what time of the year it is. Basically, in the morning, I’ll see what happened on the daily candle. When the daily candle closes in the morning, I’ll know whether or not I want to get into a trade that evening when the London and Frankfurt sessions start to fire up.
Basically, I get my trading day in order in the morning and then I’ll actually go into my platform and put in my orders that evening. I basically have about a half hour period every day; about fifteen minutes in the morning, fifteen minutes in the evening for my trades.
I don’t have to do what the four-hour chart traders do or the one-hour candle traders do where you have to spend more time, literally, like watching the chart. That’s how it works.
Sometimes, it’s going to be a function of your account size whether you have a job, or a family or other responsibilities, and what part of the world you’re in and all that.
Basically, you want to look for something that fits your lifestyle. Whether it’s trading the daily chart, twenty or thirty minutes a day, or trading the four-hour chart where you actually sit down two or three times a day and make decisions.
Whether you actually have that block of time as my friend in England does, to sit down and watch the one-hour chart for few hours. That’s basically what you want to decide and then you go from there.
You don’t really want to go by so and so what they’re doing, how they’re making profit. You really want to go by your lifestyle, what you want in terms of how much you want to get away from the charts.
I know in the beginning, it’s really tempting to do a lot; to sit down and just trade, trade, trade. Most traders are going to be better off starting on a higher timeframe and working their way down slowly to a lower timeframe.
It’s usually easier to go from that very disciplined approach where you’re using, basically, your frontal lobes in planning out your trade before you move down into the wild. Even the one-hour candles can be pretty wild.
It sounds crazy to people that are used to trading the five-minute chart but even the one-hour candles can really hop round up a bit. It really is probably going to be dependent on your approach and what your lifestyle is like and what you want.
What do you want to get out of trading? Do you really want to sit down for four or five days a week, for five or six hours a day and try to restrain yourself from going crazy on the chart?
I mean, that’s the thing that you need to decide. That would be my answer. What about you? I know you trade some four-hour charts. How did you come to where you’re at?
Hugh: For me, I just get too nervous trading those lower time frames. Like you said, the one-hour is going to be my lowest time frame, otherwise, you’re just going to go nuts and even that gets a little crazy sometimes.
It just seemed to workout for me and I’m pretty good at sitting on a trend. I’ve found that’s my strength. If I could get in the four-hour chart, or the daily chart, and just sit on the trend until the exit signal comes up. I used to do pretty well on those trades. That’s what help me stick with that time frame.
Walter: That’s brilliant! That’s really good, Hugh. You definitely have some qualities that are a little bit different to most traders. Being able to sit on a trade like that is so cool. Then, also the fact that you’re not one of those guys who wants to take a whole bunch of trades. In fact, you have to work through being a little bit trigger-shy.
If you’re listening to this right now and you have the same characteristics as Hugh, you’re actually in a really good spot because you have some things that are easier to build on than a trader who comes in and is taking trades left, right and center and just can’t restrain himself or herself and it’s going crazy and just wants more opportunities.
Those traders have a little bit more difficulty trying to find discipline whereas, Hugh have a lot of really great habits to build on. That’s awesome! I love hearing this about your trading. This is cool.
Hugh: Thanks for the tips and awesome ideas. Talk to you next time.
Walter: See you.
Hugh: See you.