Beginners often wonder about the best time to trade. Some experts advise beginners to stick to higher time frames because the price action and signals in this view are more reliable. Some say lower time frames are better, and they report that it delivers success as well. So, what is the best time frame?
The answer is there is no best time frame. Moreover, there are no time frames superior to another one. If that is the case, we should be hearing reports from the majority of traders around the world saying that a particular time frame is not as effective as another. All time frames are equal. It is just a matter of preference. According to the Corporate Finance Institute (CFI), the most common time frames for tech traders are 5-minute charts, 15-minute charts, hourly charts, 4-hour charts, and daily charts.
However, keep in mind that there is the best time frame for a given circumstance. It depends on the traders’ needs. For instance, if you are a trader with a full-time day job, you cannot afford to stare at the market all day long. The best time frame for that will be anywhere above the four-hour time frame, such as the daily time frame. In a daily time frame, each candle updates once a day. Traders at this pace check the candles before they leave, and they monitor how yesterday’s market has closed. As they come back from work, they track their position. Checking one to two times a day is enough for people who have full-time jobs.
Things are much slower when you trade in the daily time frame. A candle does not close in two seconds, so you have time to make trading decisions. At this pace, traders can do multi-trading. For instance, aside from cryptocurrency, they also look at stocks and other markets. Investors have more time to do fundamental analysis in the market, integrating it with the technical components they currently employ because they are not focused on charts minute by minute. As a result, they can make better decisions, feel less stressed, calculate trading risks, identify how many units they should buy, and know when is the best time to buy crypto. These factors take time to process and think.
Traders who have recently graduated prefer to trade in the 2-hour time frame because they have more time on their hands. In this pace, trading is comparatively fast, but it is not that fast to the point where they need to make split-second decisions. They can think about trading decisions. It seems fast because the candle updates once every 2 hours. It is not a total disadvantage, however, because it means they can place more trades. With more exchanges, they learn more and faster. At a 2-hour time frame, traders get exposed to different sessions of the market. Aside from that, crypto traders with this time view gain access to significant trading moments in specific regions, countries, or states, which is an advantage in a very competitive market.
People who trade within the day or daily business hours are called Intraday traders. Most of them are professional traders who use their full time daily in analysing the market. Most of them get connected from beginner traders through reliable crypto trading platforms like Bitcoin Revolution. According to CFI, intraday traders consider price movement that occurs inside a 15-minute time window highly substantial since they are looking to profit from price swings over one trading day. On a daily or weekly chart, the same price movement may not be as notable or indicative for long-term trading goals.
To simply put, in extended time frames, one is zooming out the view in the market movement. From this perspective, one can form a distinct trend. This trend may vary in form when you zoom in on your vision of the price market because the movement of price in a short time frame may be different from its movement in the longer time frame. Investopedia explains that the charts become more cluttered with false moves and noise as one dives down in time frames.
To sum it up
It is only a general rule that long time frames are more reliable because it still depends on the trader’s goal. If the goal is to become profitable in a shorter period, then information about price movement at a short time frame is favourable. There is no magical or most convenient time frame as it all depends on one’s style and circumstance.