When you started trading at Forex, you went for the smaller time frames because they are only for 1 min, 5 Min or 15 min and give you a lot of opportunities. The Forex market changes every second and when you are new these small time limits give you numerous trading opportunities.
However, you may be actually be losing from these small time frames. 3 Reasons why multiple time frame analysis are better:
- Erratic Movements Wipe Out Accounts – These small time frame charts (1 minute and 5 minute Forex charts) are not good for your account. These charts move at a quick and erratic pace and this pace is not suited for a new Forex trader, who is still learning the tricks of the trade. Before the trader can point out the trend, in the market and make a trade, the market changes again. Small time frame charts may give you more chance to enter trade, but it doesn’t imply that all these trades will be successful.
- Longer Time Frame Charts Are More Reliable – Long time frame charts are more accurate for you because a lot more time is spent on preparing them. If you take a small 15 min time frame chart, you will know that the market will not change in the next 15 min and has been made after taking into account the UK and US sessions. You will therefore know that the chart with the longer time frame will be more reliable and therefore a better chart to follow for your trade.
- Do Not Sway Because Of Some News – If you are using short time frame charts you are more likely to stop your trade the moment you get to know of news that will affect the market. You will rather stop and watch how the market is affected. This action affects the whole market and trade in a say 15 min time frame chart. The longer time frame charts, however, are less likely to be similarly affected. You will have a wider time frame and the news will not spur any immediate action.
If you have been struggling to make money from your short time frames, you should at least give the higher time frames a chance. See how you fare over there and since you will make profit, you are likely to stick with it.