What is Timeframe in Forex trading?

Timeframe is a certain period, during which the price changes. Traders use the short-term and long-term trading strategies.

Strictly speaking, a timeframe is a period in which your price chart makes an increment. That means, if you set an M1 timeframe, your price chart will make one new increment or form one new candlestick in one minute. If you set an H4 timeframe, then you’ll have a new bar every four hours. Logically, the smaller the timeframe is, the more fluid the picture that you see will be. The longer the timeframe – the more historic and strategic the perspective will be.

Most traders prefer short-term trading, and hence, they use short-term timeframes. What are the advantages of this approach? Here are some of them:

• Frequent price movements imply a possibility of making a lot of trades in a limited period; therefore, it leads to a higher probability of making quick profits
• Short-term trading relies on technical analysis more than on fundamental – that may save time for many traders who prefer studying and applying chart patterns instead of reading in-depth about large-scale market impact factors
• Short-term trading allows efficient use of various indicators which facilitate chart reading and price prediction
• There is a variety of short-term timeframes from M1 to H1 which presents a wide array of trading strategies from scalping to casual intra-day trade.

Therefore, if you’re planning to trade intraday using indicators and chart patterns, a short-term timeframe is what you’ll likely choose.

Also read: Forex Signals for Newbies