Forex for a trader
Trading one hour forex chart

Trading one hour forex chartTrading the 4hr Charts. Verified Profitable Trader. The 4-Hour Chart. No, this is not a Timothy Ferriss promotion or new book, but an examination of the 4hr chart, along with the how and why I recommend using it for your price action trading. If you are in the beginning or developmental stages for learning how to trade the forex market, I definitely recommend learning to read price action off the 1hr, 4hr an daily time frames. For our purposes, we will concentrate on the 4hr chart. Some Advantages of the 4hr Time Frame? Price Action is the result of order flow (the total summation of all buy and sell orders). It really matters not why people buy and sell, or if they are buying and selling, what matters is who has dominant control of the market, where is the market most likely to go, and how can we trade it. With that being said, a few minutes of price action can more often than not, represent a false move, perhaps Toyota buying some USD with JPY, and very likely have any significant force behind it to drive the market, bring in other players, and be the start of a big move. Think about it…how many 1min, 3min, 5min, 10min, 15min, or even 30mins of price action throughout the day will really be representative of a major move and driving force throughout the day? Now, think about the 4hr chart.

No matter how you slice it, 4hrs is half of a trading session (for the most part). For any trading session, a 4hr candle will represent a large sum of order flow, sentiment, continued or sustained buyingselling, etc. If a rejection happens on a 4hr chart, it likely represents a large rejection because to sustain that rejection, the market had to close the entire 4hr candle while maintaining the rejection till the end. If it rejects during the 4hr candle, but closes exactly where it rejected, then it wasn’t that important because it couldn’t sustain that rejection in time. Time is a critical component when reading price action and representing order flow. In many cases, the longer price reactsrejects off a key level, the longer it holds from that rejection, the stronger it can be. Of course the price action context leading up to it is key and informative, so make sure to understand this. But if a key level can sustain the directional move for 4hrs as opposed to 5mins, then it had to do so through increased order flow and participation from the market. That communicates there were more players and more money behind this move. But on a 5min candle, or even a 1min candle, this could be nothing and represent littlemeaningless order flow with no real potency behind it. It could be the result of some minor profit taking which creates a negative feedback loop in terms of order flow and price action. But do this for 4hrs and sustain it into the close, and we are talking more participation, orders, money and participants. For price to sustain a particular price action move for 4hrs means no matter how many players, sentiments, and ideas there were participating in the market, the dominant theme held for half the trading session and quite a long time. But on a one min time frame, a 5min, or even 30min time frame, these moves could be simple noise which can move the market up to 30pips without having any major force behind it. Think about how many 5min candles in between the NY close and Tokyo open and how much order flow will really be behind that? Think about how many 1min and 3min candles will be between the 3rd and 4th hours of the london session (where volatility and pip ranges generally decrease) and how they will represent less order flow and participation. Then you will see how ineffective these candles can be and how what your reading has very little meaning. One and Two Bar Patterns. Continuing with that logic, for those who trade pure price action patterns, like an inside bar (which is a 2 bar pattern) shows up on a 1min, 3min, 5min or even 30min time frame, it is much more likely to be absolutely meaningless than an inside bar which shows up on a 4hr time frame. Think about it, if price holds inside the previous price range on a 5min candle, that could mean almost anything and be the result of a laundry list of order flow environments and situations.

5mins of price going nowhere could mean anything and have very little direction on upcoming order flow. But apply an inside bar on a 4hr time frame, and you are talking 4hrs of price action being held in a range for almost half an entire trading session. That means no matter how many players participated in the market, nobody was able to break the previous price range for an entire 4hrs which tells you a) price was pretty suppressed, b) very little directional control in the market, c) very little participation. That is much more communicative in terms of information than any passing 5mins. The market could be in a dominant trend, but be simply pausing for 5mins because its coming to lunchtime, there were some short term counter-ordersforces in the market that will be quickly absorbed, a little profit taking (again, a negative feedback loop on price action and thus, not great for trading). Technically, for an inside bar pattern, you would be basing your decision on 8hrs of price action since an inside bar pattern is a 2bar pattern (thus 8hrs), so there is a lot more information in this then an inside bar pattern on a 5min time frame (10mins of price action). Furthermore, to get any real significant amount of data with confirmation and continuation of the order flow (and price action), you need far more 1min, 3min, and 5min candles to make sure the noise is filtered out. That means more moving parts and more variables to manage. Contrast to the 4hr chart where one candle (or two) can give you all the information you need to make a trade while filtering out any noise and meaningless price fluctuations. For an interesting story about meaningless price fluctuations, make sure to put in a question in the comment box below and i’ll tell you a story which will blow your mind. In Conclusion. As we can see, when trading and reading price action, a 4hr candle will offer us much more information, and have a cleaner look and feel to it than any 1min, 3min or 5min chart. This will make it easier for you in your learning process as you’ll be making decisions off of less false signals, more information and cleaner charts. The 1hr, 4hr and daily time frames will have a greater communicative value about direction, clear supportresistance levels, what is a key rejection, who’s in control, while filtering out noise and meaningless order flow and price action. This will give you less confusing information in the beginning, and teach you how to be patient with your trading.

Once you have developed your skills, have some experience and confidence under your belt, it’s really up to you from there how you want to trade, whether it be on the smaller time frames (1min – 30mins) or larger time frames (1hr, 4hr and daily). At that point, it’s a question of style and life - style . But it should be noted we aren’t saying trading on the lower time frames is meaningless. One can trade price action on any time frame and make money. In fact people are making money on almost every time frame available. Just understand you have to increase your price action skills and ability to read price action context before trading lower time frames. For some people’s brains, it doesn’t work with their natural wiring and dispositions. For other traders it does, so the key is finding what works for you. If it hurts your brain, then it likely isn’t for you, so make sure whichever style you trade isn’t hurting your brain, but engaging it well. For those of you wanting to learn how to read price action and the order flow behind it, take a look at our Advanced Price Action Trading Course where you will learn rule-based price action systems to trade the forex market. Please remember to leave your comments below and to ‘Like’ and ‘Tweet’ to share the article. Also make sure to check out our most recent article on Price Action Trading. A Personal Trading Strategy. Your Forecast Is Headed to Your Inbox.

But don't just read our analysis - put it to the rest. Your forecast comes with a free demo account from our provider, IG, so you can try out trading with zero risk. Your demo is preloaded with ?10,000 virtual funds , which you can use to trade over 10,000 live global markets. We'll email you login details shortly. You are subscribed to Richard Krivo. You can manage you subscriptions by following the link in the footer of each email you will receive. An error occurred submitting your form. Please try again later. While I occasionally trade from the Daily chart, primarily I use it to determine the trend of the pair. Once I have identified the pair that I feel has the strongest trend based on the Daily chart, I will usually enter on a 4 hour or 1 hour chart. whichever time frame best optimizes my entry. Here's what I am looking for chart by chart .

The Daily Chart: The Daily Trend on the NZDJPY is down . This determination is made based on the pair making lower highs and lower lows, price action is below the 200 SMA and pulling away from it and, at the time of the analysis, the NZD was the weakest currency and the JPY was the strongest . Also, looking at Slow Stochastics , I see that it is below 20 which is a very bearish sign. Given all of th e above , I know I will only be looking for opportunities to sell the pair as they will have the greater likelihood of success. (Trading in the direction of the longer term trend offers us that edge.) The 4 Hour Chart: Then I will look to the 4 hour chart and look for a retracement (a move against the Daily trend) to be finishing and beginning a new move to the downside . In other words, a fresh move back in the direction of the Daily trend. Sometimes that fresh move will prese nt itself straightaway or I may have to wait for the set up to occur. In the case of this particular 4 hour chart I would need to wait for the pair to cycle back up as a new move to the downside has already taken place over the last five red candles on the far right of the chart. I will also run through this same process on the one hour chart looking for the same set up. Once a “ fresh move ” begins on either the 4 hour or the 1 hour chart , an entry can be made with a stop placed above the highest level of the recent retracement. (Stochastics, MACD or RSI can be used to further time the entry.) The 1 Hour Chart: In the case of this 1 hour chart, I would be waiting for a pullbackretracement to take place to short the pair. Since the pair has been in a strong, on-going downtrend on the Daily chart, I would have been able to successfully sell the pair at any of the points on the chart after the retracement (black arrows) takes place. The short position would be opened when momentum shifts back to the downside (Stochastics crossover within the black circles). In each instance the stop would go above the most recent high approximately at the black lines.

Sidebar: Some traders will become frustrated when they see price is moving opposite the direction of the Daily trend. Don’t worry about it. It is fine since that means a retracement is taking place and once that is complete, we will be looking at an opportunity to enter the trade in our direction of choice. the direction of the Daily trend. DailyFX provides forex news and technical analysis on the trends that influence the global currency markets. The Four-Hour Trader, A Full Trading Plan. by James Stanley , Currency Strategist. Price action and Macro. Your Forecast Is Headed to Your Inbox. But don't just read our analysis - put it to the rest. Your forecast comes with a free demo account from our provider, IG, so you can try out trading with zero risk. Your demo is preloaded with ?10,000 virtual funds , which you can use to trade over 10,000 live global markets. We'll email you login details shortly. You are subscribed to James Stanley. You can manage you subscriptions by following the link in the footer of each email you will receive.

An error occurred submitting your form. Please try again later. Four Hour Trader Talking Points: Traders can implement a well-heeled plan taking only four hours per week The four-hour chart can be ideal for Forex Traders looking to trade around the clock We outline a full plan based around Price Action that traders can begin using today. All of the sudden, the world has gotten very small; and life is moving faster than ever before. The internet presents a lot of benefits to the human species; but time management is not one of them. As competition for page views, viewer numbers, and attendance continues to heat up, very little in this life emphasis a slow and steady approach. But to the trader, in many cases, that is the best way to go about speculation in markets: Slow, steady, and consistent . But being there as a trader, and getting there as a new speculator are completely different markets. In this article, we’re going to outline a complete trading plan that will take less than four hours of a trader’s time each week. And further, this is an approach that can be focused on longer-term moves , and swings . If you have a day job, or any other pre-existing commitments that limits your time on charts, this is an approach that can offer quite a few benefits. The Center of the Approach. The 4-hour chart plays a special role in the FX market.

Most equity markets are open between 8 and 9 hours each day, and as such, the four-hour chart might take on less importance. After all, a four-hour chart just shows two bars for each trading session, so traders might as well just look at the daily chart. But in the Forex market, the four-hour time frame takes on special importance. The market never closes, and traders are literally Trading the World . The four-hour candle represents half of each geographic trading session. Each of these sessions can take on markedly different tones, and that is where traders can look for potential opportunities. In the FX Market, traders are truly ‘Trading the World’ Traders can use the price movements and gyrations on these four-hour charts to analyze markets, and find potential pockets of opportunity. Watch for the close of each 4-hour candle that you can. Using the New York close to define ‘financial time’ means that we’re seeing candles close at 5, 9, and 1 AM and PM (based on ET). If you’re using Central Time, that’s 4, 8, and 12 AMPM while Pacific Time is 2, 6, and 10 AMPM. If you’re busy at the time, Mobile Applications can generally offer you what you need to perform the analysis at the close of each of these candles.

Traders can then take a ten-minute block of time upon the close of each of these four-hour candles to look for potential trade setups, while also using this as an opportunity to manage risk . If the trader is awake for four of the six four-hour candles that form each day that would mean that the trader would need approximately 40 minutes per day to analyze charts. If time permits, an additional 10-15 minutes can be used at or around the daily close. The total time commitment required is 40-50 minutes each day, for a total of 200-250 minutes per week (240 minutes is 4 hours). Use Price Action to locate the strongest trends. Trends in markets can be easily graded and seen with price action… by simply looking for charts to make progressively higher-highs, and higher-lows (in the case of an uptrend), and lower-lows, and lower-highs (for downtrends). Price Action can help traders locate the strongest trends. In the article Price Action, an Introduction we look at a way that traders can grade trends without the use of any indicator at all, using just past prices. Traders want to look to trade in the direction of these trends; buying up-trends, and selling down-trends. But, is it enough to just buy up-trends or sell down-trends and ‘hope’ that they continue?

No. Traders can use price action to appropriate their entries into these positions. Use Price Action to buy up-trends cheaply, and sell down-trends expensively. Once a strong trend has been located, the trader can then look to plot their entry by looking for a ‘trigger’ into the position via price action. Once again, traders want to look to efficiently buy up-trends when price is cheap, or near support. We looked at how traders can find this support in the article, Price Action Swings . Traders can look to buy up-trends after a recent swing low. Traders can look for additional confirmation of the entry by looking to the price action candles that form at or around those swings. We looked at quite a few of these triggers in Trading Bearish Reversals (for down-trends) , and The Hammer Trigger for Bullish Reversals (for up-trends). Traders can look for bullish triggers at or around recently printed new lows. Use Stops and Limits to Enforce Favorable Risk-Reward Ratios. We talk about this a lot at DailyFX, and there is a reason for it: It’s important!

One of the main premises of our price action education is that future prices are unpredictable, and as such, there is no such thing as a ‘holy grail’ or ‘can’t lose’ strategy. By adding a stop and limit, and letting the trade work – the trader eliminates the possibility of making a knee-jerk reaction that they may end up regretting. It also enforces a favorable risk-reward ratio, and puts traders in the most promising spot to avoid the number one mistake that Forex traders make. Since traders are looking at their charts for each four-hour bar, they have built-in trade management for each position that they take on. Traders can use the close of each four-hour candle as an opportunity to adjust stops ( particularly the break-even stop ), or to take profits while also looking to trigger new positions. Traders can take this a step further by trailing their stop in an effort to lock in gains in the event that the trend gets especially built-in. We looked at this premise in Trading Trends by Trailing Stops with Price Swings. Traders can lock up gains to maximize trends. Created by James Stanley. -- Written by James Stanley. James is available on Twitter @JStanleyFX.

The 4 hour trading approach requires a solid psychological foundation to markets. Check out our Building Confidence in Trading g uide to learn more about the mindsets behind trading. DailyFX provides forex news and technical analysis on the trends that influence the global currency markets. 1 Hour Forex Scalping Strategy. The 1 Hour forex scalping strategy is designed to take advantage of the 60 minute time frame. Instead of staying glued to your screen all day, you only need to check your charts once every hour to discover new forex scalping opportunities. Chart Setup. MetaTrader4 Indicators: 100pips Momentum. ex4 (default setting), indicatorarrows. ex4 (default setting). Preferred Time Frame(s): 1-Hour Recommended Trading Sessions: Any Currency Pairs: Majors (EURUSD, USDJPY, GBPUSD, AUDUSD) Download. Example: EURUSD 1-Hour Chart (click the image for full size) As you can see from the EURUSD 1-hour chart, 150 pips of profit were made from checking the chart once every hour.

Check out the rules below. Trading Rules. Buy trade conditions: Enter a long position when both conditions are met as shown below: the 100pips Momentum indicator triggers a buy bias when its blue line crossing the red line from below.(trend bias up) Indicatorarrows paints a green arrow. ==> Open a buy trade. Stop-Loss: Place below the most recent support or below the red indicator line. Take profit: Close the trade for 30 pips. Alternatively, close the buy trade when the Indicatorarrows indicator paints a red arrow (short-term bearish). Sell trade conditions: Enter a short position when both conditions are met as shown below: the 100pips Momentum indicator triggers a sell bias when its blue line crossing the red line from above.(trend bias down) Indicatorarrows paints a red arrow. ==> Open a sell trade. Stop-Loss: Place above the most recent resistance or above the red indicator line.

Take profit: Close the trade for 30 pips. Alternatively, close the sell trade when the Indicatorarrows indicator paints a green arrow (short-term bullish). Easy 1 Hour Forex System. This is an utterly simple trading system designed to trade 1 hour forex charts. The system is made up of only 1 trading indicator. You can use it on any currency pair. Chart Setup. Indicators: easy-forex-system Preferred time frame(s): 1 Hour Trading sessions: Any Preferred Currency pairs: Any. Download. EURUSD 1 Hour Chart Buy Example. As shown in the EURUSD chart above, the moving average has closed above the blue and yellow line.

This simply means to BUY the currency pair. Trading Rules. Buy Rules: Moving average (white line) has to close above the blue and yellow line. Buy now. Place SL 5 pips below the previous swing low price. Exit buy Strategy: Close 50% of your trading position at 1:1 risk-to-reward ratio. Close 50% at 1:2 risk to reward ratio. Trail protective stop 2 pips stop below the rising yellow and blue line. EURUSD 1 Hour Chart Sell Example. Sell Rules: Moving average has to close below the blue and yellow line. Sell now. Place SL 5 pips above the previous swing high price.

Exit sell Strategy: Close 50% of your trading position at 1:1 risk-to-reward ratio. Close 50% at 1:2 risk to reward ratio. Trail protective stop 2 pips above the falling yellow and blue line. Jason Sweezey’s 1 Hour Forex System For 1H Charts! November 19, 2011. Watch this 1 Hour Forex Trading FREE video by Jason Sweezey. Jason Sweezey is a pro forex trader who has released a number of highly successful forex products in the past like the Forex U-Turn or the Forex Pips Snagger. This time, he is about to show you his 1 Hour Forex Trading System. Now, Jason Sweezey is a well known and respected pro trader in the forex trading community so you can be pretty sure that his 1 Hour Forex Trading System works. This is a unique trading strategy that makes on average 870 pips per month. Jason says that his 1 Hour Forex Strategy is going to change your life. He is giving away three copies of his system FREE. These three lucky winners will be randomly selected from the people who register after watching the 1 Hour Forex Video.

So don’t miss your chance of winning the system FREE that comprises of: 1. 8 step by step video tutorials 2. 1 Hour Forex Manual 3. 2 custom made MT4 indicators. These are not some lagging indicators that repaint themselves. Jason is going to show you how to trade with 100% pure price action using his 1 Hour Forex System. 1 Hour Charts Forex Strategy. The choice of the right time frame is very important when trading forex. Some traders trade the shorter timeframes like the 5 minute, 15 minute or the 30 minute charts. While there are other traders who trade the longer timeframes like the 4 hour charts or the daily charts. Recently, I was reading the comments made by a trader who traded on the 15 minute charts for years with some success but recently when he changed to trading the 4 hour charts and the daily charts, he got his break and is now enjoying his huge success in forex trading. The dynamics of a forex strategy is highly dependent on the timeframe that you choose to trade that strategy.

Jason is a master of forex trading. You need to watch the 1 hour forex video and then even if you don’t win the system FREE, you can try his system RISK FREE for 30 days on your demo account. This system has been developed to specifically trade on the 1 hour charts. When demo trading with this system, what you need to note is the ease of trading with this 1H chart strategy developed by Jason and the win rate on average. Another thing that you need to note is the average size of the stop loss while trading with this strategy. If after one month of demo trading, you feel happy with this strategy, you can think about trading live with this system. But if you don’t feel satisfied, you should get a refund on this 1 Hour Forex Strategy! Trading one hour forex chart. There is a common wisdom that all traders will sooner or later come to the conclusion that the optimal timeframe for online trading is one day and more. However, it is difficult to say is it true or not, because basically the difference between timeframes is determined rather by the size of the deposit and the free time which trader has. There is, of course, the presence of the so-called "noise" movements at the less than one day intervals, but fractal analysis settles this problem as well by applying mathematical calculation for all hardly predictable price movements. Nevertheless, Forex trading systems in the interval less than a day make not a daily profit for many traders only, but also the perfect combination of energy spent and the income which was made. I would like to show you an example of a simple trading strategy which uses two indicators only. This is a simple one hour Forex strategy.

The graph shows the principle of work with the EUR USD pair on the hourly time interval. Two indicators are used here. The first one is the Relative Strength Index with a parameter 13, and the second one is a simple moving with a parameter 13 and the shift by three candles. The principle is simple. The most important here is not wait the moment when the RSI shows overbought or oversold levels. Only after this indicator signal you can expect moving signal. This signal indicates a situation when a simple moving average meets the price graph from the bottom with the upward movement and from the top in a downward motion of the price graph. Stop-losses can be placed according to the wish of the trader, but within the last minimum or maximum. This one hour Forex strategy is distinctive because of the fact that, in parallel with standard signals, it often shows divergence - convergence signals.

You can add another indicator to this chart, it is better to say another moving. If you add MA with parameters 21 and shift 5 to this chart you will get the opportunity for long orders. Furthermore, this one hour forex strategy gives us another signal that is an intersection of two moving averages, and it provides us with an opportunity to weed out the wrong signal for the closing order. So, the order is closed not when the price graph meets the MA13, but when the price graph crosses the MA21. However, we should note the nuance of this trading strategy that is a large number of false alarms. To do this, you just need to adjust the parameters of the basic indicator of the trading strategy. The picture shows the Relative Strength Index with the parameter 13. If you set, let’s say, the parameter 21, then the number of indicators’ signals will be reduced significantly, but at the same time the false signals will be reduced as well. In general , the trader decides which parameters to use. Another one hour forex strategy is described further. It is based on a single indicator, which is called Bollinger Bands, or Bollinger Band line. This indicator allows you to work in a sideways motion, and in long positions as well. However, due to its interpretation and changes in the parameters, the Bollinger Bands indicator remains the difficult one for many traders. But here we will explain its signals in a simple way. So, the parameters are: a period 20, shift 3. The rebound from the top and from the bottom line of Bollinger Band is a signal for the orders opening.

Thus, the trade is conducted within the channel of price movement. The middle line is used as a simple moving and defines the main trend direction. Furthermore, two significant signal should be noted. The first one is when the price does beyond the upper or lower Bollinger Bands. This situation indicates that the movement will continue. The second signal is a strong narrowing of the canal. The example is shown on the picture below. In this case, you should pay attention to the situation when the middle line meets the price graph, because it is a strong signal for opening of the order. Thus, using the one hour interval on the Bollinger Bands line you can achieve the high accuracy of the price trend forecast. To draw a conclusion, we can say that the one hour Forex strategy can be made on the basis of almost any indicator, and the combination of any of them can be applied.

The most important rule here is a strict adherence to the established strategy, regardless of its components. Source: Dewinforex. Forex Eight hour Chart Challenge. In a recent post I asked if you wanted some tips on trading eight hour charts in Forex. The response was astonishing. The post received over 100 comments from readers wanting to learn eight hour charts. In this post I am going to set a one month challenge with the goal of making you a more efficent trader. How I Started Trading Eight Hour Charts. Traditionally mid-range timeframe Forex charts have been limited to four hour and daily. However, in the last few years some brokers have introduced new timeframes to their platforms. I first found out about eight hour charts in early 2012. One of my advanced course students suggested the timeframe to me. At first I was hesitant about breaking away from four hour and daily time frames. After testing the eight hour time frame for a few weeks I fell in love.

Why Eight Hour Charts? One of the major benefits is that they save your time. Eight hour charts only need to be checked every 8-12 hours, making it is easy to trade them around a busy schedule. You may be thinking that the daily charts save even more time, and you would be right. However, daily charts have far fewer trade setups than eight hour charts. Eight hour charts strike a good balance between time saved and quantity of trade setups. How to Get Eight Hour Charts. The easiest way to get eight hour charts is to visit tradingview. com. Unfortunately many brokers are still using MT4 which does not have eight hour charts. There is an MT4 plugin which allows eight hour charts but it does not work for a lot of people. If you want to give the MT4 plugin a shot check out this recent post. Simple Trading Challenge.

Now that you know a little about eight hour charts and how to use them I want to give you a challenge. The challenge will run for a month, and your goal will be to simplify your trading and to develop some efficiency. Step One: Choose Four Pairs. Trade Four Pairs Efficiently. Normally I tell new traders to pick a single pair and stick with it. However, this challenge is designed for people with limited trading time. Multiple pairs are required for this challenge to maximize your chances of catching a trade. I will be trading EURUSD, GBPUSD, AUDUSD and EURJPY. Step Two: Choose One Time Frame. This part is obvious, you need to choose the eight hour time frame. Create an eight chart for each of the pairs in step one. Step Three: Choose a Trading Strategy. I recommend you use my simple Forex strategy. I use a combination of support and resistance and candlesticks to trade reversals.

Generally, I get two to four setups per week across the four pairs in step one. If you already have a working strategy, feel free to use it. This challenge is all about making you a more efficient trader. If your strategy works but you miss trades, you can adapt the strategy to fit the parameters of this challenge. Step Four: Create a Trading Plan. You should already have a trading plan. If you don’t, you are making a major mistake. If you already have a trading plan you may simply need to adapt it to this challenge. If you need help creating a trading plan check out the free Forex trading and money management plan course. Step Five: Start Trading. Once you have your trading plan it is time to start trading. The challenge is simple. You need to limit yourself to four pairs on the eight hour time frame. You should try to check your charts once every eight hours. If you cannot manage to check your charts that often try to check at least once every twelve hours. If you see a trade set up, trade it. Feel free to use automatic entries and exits if needed. I am hoping that this challenge will allow you to trade more efficiently.

Checking your charts once every eight hours should allow you to fit trading around a busy schedule. Eight Hour Chart Tips. Over the next few weeks I will be writing a lot about eight hour chart trading. So keep an eye out for some more tips that will help you in this challenge. Taking part in this challenge? Leave a comment below and let me know! What Are The Best Chart Time Frames To Trade ? As price action traders, we primarily study charts and price bars, and the price bars in each time frame show us the ‘emotion’ of price for that specific period of time. Whether it’s a 1 hour, 4 hour or daily chart, each price bar on the chart shows the ‘emotion’ and sentiment for the period of time it reflects.

For example, on a 1 hour chart we will be able to see the emotion and feeling of the market over the last hour by looking at the last price bar on that chart. That said, a 1 hour chart or a 4 hour chart is going to show us a lot more data, emotion and insight into the market than a 5 minute chart will, would you agree? Would you also agree that the daily chart will show us even more emotion than a 1 hour chart or 4 hour chart? Today, I’m not just going to tell you what time frame to trade, but I’m going to explain to you why time frames influence the signal you’re trading, stop placement on a trade and the chances of winning and losing a trade. The implications of these points are profound, yet they are often over-looked or ignored by day-traders and scalpers. I am going to show you some evidence of why you need to take this stuff seriously and turn off your low time frame charts once and for all. The connection between time and trustworthiness of a relationship. Think of the market like a personal relationship between two people; the longer you’ve known someone, the more you know whether or not you can trust them, right? If someone shows you they are a trustworthy person over time then you will probably trust them, however, if a person lies a lot you may actually trust them less as you get to know them…but the point is that until you’ve spent time getting to know a person, you really can’t make any judgments about them, one way or the other. To give you a more specific example; when you meet someone for the first time, can you really get a good feel for their personality and character in just 5 minutes of talking to them?

Or would it take a full day of conversation to get a more accurate feel for their personality and overall mood? The longer you’ve known someone, the better “feel” you have for who they really are. It’s really very similar in trading; the more you study higher time frame charts like the 4 hour and daily, the better ‘feel’ you develop for the market because you are getting to know more about it and you can see the “bigger picture” a lot easier than you can on smaller time frames. The higher time frames carry more weight because they display more data and show more time than a smaller time frame does. If you are just studying 5 minute or 15 minute charts all the time, you are missing out on the bigger, more significant picture of the market. You’ve probably witnessed this with a long-time friend; you can almost figure out how they will react in any situation…whereas with a complete stranger whom you’ve known for only 5 or 10 minutes, this would almost be impossible; it’s obviously because you’ve had more time to study and learn about your friend. Let’s look at a chart example of how a 5 minute chart really does not tell you much about the “bigger picture” of a market. Below, we see the 5 minute USDJPY chart, and from this data we really cannot tell if the overall trend is up or down, as the market appears to just be ebbing and flowing very quickly and without much underlying or consistent sentiment: Next, let’s compare that 5 minute chart above to a daily chart time frame of the same market; USDJPY. From the chart below, even a 6 year old can tell that overall price is moving up; there’s an uptrend underway. Due to the simple fact that you are getting to know more about the market from looking at more data, you are learning some very very important things about it (that the trend is up!) that you cannot tell from just looking at the 5 minute chart. Another example; if you are traveling and you stay in a town you’ve never been in before for one week, and it rained the whole week, would you tell everyone it “rains a lot in that town”? Or would you agree that you really need to stay in that town for longer and observe its longer-term weather patterns to make such a judgment?

Most of us would agree that you need more than one week’s data to judge a town’s overall weather pattern…in other words, a week inside of a year is basically just noise. You can’t make an assumption about a town’s weather pattern unless you look over a longer period of time. Similarly, it’s nearly impossible to read a market’s underlying sentiment without analyzing higher time frame charts. Longer time periods = more data = more evidence proof. Why lower time frames are “noise” Simply comparing a 5 minute chart to a 1 hour chart will show you how many more failed signals there are on lower time frames. The underlying reason as to why lower time frames (I consider anything under a 1 hour chart to be a “low time frame”) have more failed signals than their higher time frame counter parts, is because there will be a lot more meaningless price movement on a 5 minute chart than on a 1 hour. For example, if you were to just look at one price bar on a 1 hour chart, you would not see all the 5 minute incremental movements that made up that 1 hour period….you would instead see the collective picture of all those 5 minute movements. You simply are not going to get a very strong directional movement out of a 5 minute or 15 minute chart signal, instead, you will get a lot of little meaningless movements. You’ll get a much stronger directional movement out of a 1 hour signal and even more out of a 4 hour signal and yet more out of a daily chart signal. You can expect more movement from a signal the higher up in time frame you go. In the chart below, we are looking at some recent price action on the 5 minute EURUSD chart. You can see that there were a lot more pin bar signals that probably would have been losing trades than there were winning trades. This demonstrates clearly the fact that whilst there are more signals on lower time frames…

more signals does not equal more money, in fact it usually means more losing trades and lost money. Next, let’s look at the price action that occurred on the 1 hour EURUSD chart around the same time as the 5 minute image above. The first thing you should immediately notice is that there were a lot less losing trades and a lot more winning trades. It’s because there were less false-signals on the 1 hour chart since the 1 hour chart filters out a lot of that “noise” on the 5 minute chart. Market noise and daily ranges. Markets move in statistical average ranges each day; meaning there’s a certain average range that the market is probably going to move within on any given day. These average ranges will change over time as markets become more or less volatile, but you need to be aware how they affect your trades. The thing about these average ranges that many day traders and scalpers are seemingly unaware of, is that if you’re trading a small time frame and you place a stop loss on that small time frame, the chances that you will get stopped out simply because your stop is within the average statistical range of the higher time frame, are quite high. If you’re trading a higher time frame, your stop loss is likely to be outside of the average daily range of the market so you are unlikely to get stopped out from the random intra-day market noise that occurs each day. Now, that’s not to say I want you guys to place wider stops, I’m telling you to be aware that stop loss placement is a big factor in your success or failure as a trader and you need to be aware how time frames affect stop loss placement. It’s pretty obvious that if your stop loss is close to the current market price, as it is on lower-time frame trades, it’s more likely to get hit than if you’re trading the higher time frames. Small time frames demand a lot of attention. Would you like to check the market every 5 minutes or every 4 hours? The higher the time frame, the less you have to check the markets. If you are like most people, you probably have a full-time job or full-time school, or maybe even both; most people simply don’t have the time to sit at their computers all day trying to trade a 5 minute chart. It’s also a lot more stressful, so it really just makes no sense to try and ‘force’ money out of the market by scalping or day-trading.

I am a huge proponent of ‘letting the trades come to me’. Meaning, I check the markets two or three times a day and look for obvious signals, primarily on the daily and 4 hour charts, and if nothing meets my criteria for a trade setup, I don’t trade…I go do something else instead. I don’t sit there ruminating over the market all day wishing and hoping for a trade like many beginning and struggling traders do. I really do not care if I am in the market or not on any given day, and this is the attitude and trading mindset that you need if you want to trade completely devoid of emotional attachment to the market. My point is simply this; focusing on higher time frames is much better for busy professionals as well as for people who don’t want to have the stress of being glued to their charts all day. It also allows you to employ my crocodile trading method which is a cornerstone of my overall trading theory and strategy. Small time frames elicit over-trading. “Over-trading”, also known as trading when no obvious signal is present, or taking “stupid” trades, or “gambling”, is something I have discussed quite a bit in other articles, so I won’t get into it too much today. However, I will say that trading low time frames like the 5 minute and 15 minute charts, etc. is one of the biggest reasons why traders trade too frequently. The longer you park your ‘bottom’ in your computer chair watching the 5 minute chart tick up and down, the greater the chance you will rationalize a reason to be in the market. If you sit there staring at a 5 minute chart all day, the odds of you actually not entering a trade are extremely low. As humans, we struggle with self-control and self-discipline, especially when we put ourselves directly in the realm of temptation, like when trading low time frames. However, one area that we are lucky in as humans, is that we can plan ahead and avoid temptation altogether if we put our minds to it. Just as not buying junk food at the supermarket is the easiest way to avoid eating it…not immersing yourself in low time frame charts is the best way to avoid the temptation to constantly be in the market. I obviously cannot speak for everyone in the trading world, but the traders who contact me on a regular basis about struggling in the market and blowing out their accounts, are typically the ones who trade the lower time frames…that has to say something right? From these experiences that I’ve had with other traders over the years, it’s pretty safe to say that ‘social evidence’ suggests that a main cause of failure in the market is trading low time frame charts.

However, don’t take my word for it, last year we had over 15,000 emails hit our inbox, and I can comfortably say that the majority of the struggling traders I’ve helped were trying to trade small time frames. Thus, YOU should do something different…don’t be like the masses of failing traders who are constantly searching for trades on the low time frame charts. Have patience, trade only the higher time frames (1hr, 4hr, daily time frames are my favorites) and see if your trading doesn’t just slowly but steadily improve. If you want to learn more about higher time frame trading and how it can improve your trading results by filtering out meaningless market ‘noise’ and allowing you to see the ‘bigger picture’ of the market, checkout my Price action trading course. “1 Hour Forex” Trading System. every now and then someone develops something that is worth our attention. It happens very rarely lately but it still happens. If this thing is also developed by someone I personally know then it’s something giving even more trust to the whole package. The “1 Hour Forex” is a manual trading system applied to the 1 hour timeframe (that’s where the name comes from). A simple and effective one. All you have to do is download the pdf manual and spend less than two hours watching all the 8 videos to learn in depth how the trading system works and what you can expect from it. My friend Jason also developed a couple of indicator s to apply to your charts that will make the thing even easier. The average numbers of pips per trade with 1 Hour Forex is between 15 – 30 pips , sometimes higher. But, let’s use the pessimistic scenario of 15 – 30 pips with more than 90% results, considering the fact that you need no more than 45 minutes to spend in order to decide if a potential trade set up may occur, I have no doubt it will be your most profitable stress-free 45 minutes!

Remember, to be profitable you need consistency and trust in your trading system. Even 15-30 pips a day can be more than enough if you’ll have a high percentage of doing them. That’s one of the main reasons I particularly love the “1 Hour Forex” trading system. If you want to read more and keep informed about the coming release of the system simply click here .



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