Lesson 23: Which unit of time to choose? Commet trader with multiple units of time?

One question that one is invariably called upon to ask yourself when starting forex trading is: On what time trader unit?

As we saw earlier, there are several "time units": A 5-minute unit time chart will consist of candles representing 5-minute periods, and a daily chart will consist of candles each representing a day of variation.

Neither too much nor too little ... Which units of time preference for beginners?

As a beginner, it is often tempting to go to the shortest time units, 1 minute and 5 minutes, because it feels like "it moves a lot" and you can win Money quickly.

However, it is a mistake to move to the shortest time units as a beginner. Indeed, the shorter the unit of time, the more numerous and rapid the signals to be analyzed, and it is necessary to have some experience in order to be able to sort in time and decide on an informed position !

Conversely, units of time that are too long are not suitable for beginners because signals and opportunities are less frequent, and it is not with 1 trade per week that one effectively acquires 'experience!

In our opinion, beginners should initially focus on units of time 15 minutes and 1 hour.

Then, with experience, everything is about preferences

Once you have gained some experience, you can practice both the shortest and longest time units, and your natural preferences will likely point you to one side more than another.

What are the main time scales used by forex traders?

All time scales are not equal in terms of their popularity, and there are units of time more common than others, to which it will be preferable to comply:

Chart 1 minutes 
Chart 5 minutes 
Chart 15 minutes 
Chart 1 hour 
Chart 4 hours 
Chart 1 day

How to trade using multiple units of time?

Although you have to choose your "favorite unit of time", it is not the only graph that you will have to use as part of your trading. Indeed, it is possible, and even advisable to rely on several units of time for the same trading decision.

The idea is to use a "time unit of positioning" (the shorter of the 2), and a "unit of time of definition of the trend" (the longer of the two).

The positioning time unit

The unit of positioning time, the shortest of the 2 to be used, will be used to position itself precisely on the market. It is on this unit of time that the study of the signals of the technical indicators and the prices will be pushed further, with finding the right time to position.

The unit of time for defining the trend

The unit of time of definition of the trend makes it possible to "step back", to verify that is the direction of the general trend, or at what moment one is in a trend (acceleration? Biensur, ideally, your two charts "tell you the same thing".

What are the "couples" of time units to choose from?

First of all, two units of time must be chosen so that the two graphs do not "tell the same story". It is necessary to be able to take a step back to answer the following question: In what greater movement is the movement that is currently seen on my positioning graph?

We therefore recommend the following couples:

1 minute and 15 minutes 
5 minutes and 15 minutes 
5 minutes and 1 hour 
15 minutes and 1 hour 
15 minutes and 4 hours 
1 hour and 4 hours 
1 hour and daily 
4 hours and daily

Use more than 2 units of time?

Some advise to trade with 3 units of time, and although we think 2 are enough, it is possible that you feel more comfortable using 3 units of time in your trading decisions. However, this is a limit not to be exceeded.

Indeed, multiplying the units of time opens Pandora's box, prompting you in case of unfortunate position to seek a unit of time that will justify maintaining your position.

On the other hand, if too little time units are to be used, it is not necessary to use units of time that are too far apart. Indeed, what is the value of consulting the daily chart for a very short-term trading decision on a 1-minute chart?

However, multiplying the units of time will inevitably lead you to use units of time very far apart, if you restrict yourself to the most used time units presented above, as we advise.

What number of candles display on the charts?

It is useful to know the main units of time to use but there is another fundamental parameter in displaying the charts that you will use to make your trading decisions: What number of candles display on the chart?

Indeed, here too the rule of "neither too much nor too little" applies: Too many candles will pollute the analysis, with old and useless data, while too few candles will not allow to have enough information To make a correct trading decision.

To know what to do, we must first know that each unit of time has a different "memory": The longer the unit of time, the more valuable the observations that can be made there are long, which is logic.

And the best way to evaluate the "memory" of a unit of time is to be interested in the supports and the major resistances: On the daily charts, supports and resistances can remain valid for months, whereas on a graph 5 Minute, it may only be valid for half a day.

What is the memory of the different units of time?

You will find below the duration of the "memory" of the units of time, according to our observations:

Daily chart: 1 year 
Chart: 2 to 3 weeks 
Chart 15 minutes: 3 to 5 days 
Chart 5 minutes and 1 minute: 24 hours maximum