Forex Trading Basics: Timeframes

What is the time frame? What are the basic principles of the time cycle? What kind of operating procedures can be followed when trading Forex? How to look at the big weekly line and the hourly line? Beginners of Forex speculation can take a look at the following content:

As traders who focus on technical analysis, they need to understand some basic principles. One of them is to use technical analysis to solve the direction of trading and judge the level of the market.

If the direction and level are determined, then the time frame basis for entry and exit will also be available, and the risk-reward ratio can basically be determined.

So, how to grasp this time frame?

① Let’s first make a simple definition of time frame.

It means taking 4-5 times the time difference as an independent time period. For example, there are 4 weeks in a month, 5 trading days in a week, 4 hours in a day, 4 15-minute trading times in an hour, etc., and so on, including weekly level, daily level, hourly level, and 15-minute level.

If the hourly chart is used as the core trading time frame, we call the daily chart at the previous level the large cycle time frame, and the 15-minute chart the small cycle time frame, and we always pay attention to the trends of the upper and lower time frames.

② Grasp the basic principles of time cycles.

●The big cycle governs the small cycle. If the big cycle is not completed, the small cycle will not end. If we are ready to enter the market, please see if the previous cycle (big cycle) is compatible? Then see if the small cycle is also supported?

Doing this is the best filter for your trading signals, and your chances of winning will be greatly improved. Because you cannot have a counter-trend order in your hand.

●The market trends of small cycles are summarized into the trend of large cycles. If the trend of the small cycle is abnormal (the strength and intensity of the movement), it will tell you in advance that the large cycle may change.

③What should we do when we officially place an order?

First, let’s take a look upward (big perimeter), the purpose is:

●Determine the general direction. Only with the cooperation of the general direction can the market go further and smoothly. (Filtering of signals, waiting for opportunities)

●The complex adjustments on the daily line are very regular on the weekly line, clarifying the overall strategic direction. (Try to avoid the pattern of the trading cycle)

●Adjustments in the daily line may appear as 1-3 K lines on the weekly line, which facilitates timely entry and maintains existing positions. (We need to determine the level of adjustment and how to quantify it)

●If the big cycle does not cooperate, reduce the time frame or reduce expectations. (Opportunities should be treated differently)

Then we take a look down (hourly line): the purpose is:

●The trend after the adjustment in the daily line will be reflected in the hourly line in advance. Once the trend is out of the trend, enter the market in time and find the precise entry point. (That is, big straight, medium reverse, small straight. Everyone should understand this feature. In fact, during the trading order cycle, we are often against the trend! )

●Observe the adjusted movement pattern and determine whether it is normal. (Is the time and space structure reasonable and normal? Many of our traders get lost here)

●After entering the market, if the market goes out of trend, use the peak and valley of the hourly line as a defensive position. Of course, the actual entry and exit of transactions is far more complicated than what is mentioned above.

The core premise is that we must realize the importance of the time frame of the transaction, because this is the most reasonable analysis method for tracking exchange rate changes, and it is of great universality. Mastering the time frame of the transaction will greatly improve your winning rate.

It is of great reference significance for everyone with different personalities to choose a trading cycle that suits them according to their own personalities.

Similar to the time cycle of stocks, Forex also has cycles of time, day, week, month, etc. Only when the big cycle ends, the small cycle will end. The general direction is very important, and the general direction determines how far the market can go.