To know that, you need to answer other questions first.
How much time do you have/want to trade?
How much time do you want your money to be exposed to the markets?
But first, let me tell you about my personal preference and why.
What time frame do I use to trade?
I and the traders from my trading school usually focus on the M1 and M2 time frames for day trading or scalping.
The M1 time frame is a time frame that has 1 minute per candle.
The M2 time frame has 2 minutes per candle.
The action happens pretty quickly.
You need to be trained to identify trading setups very quickly.
The close of the trades should be very quick either.
But that’s not really a problem once you understand and train the trading strategy.
We make amazing drills in the trading school to train this.
At some point things just happen naturally, it becomes part of your nature.
And best of all, we know what are the best times to trade, and we use them in our favor.
So, higher time frames are less accurate?
It’s not that the bigger time frames can’t be traded or that they give worse results. All time frames can be traded and all of them behave the same way.
In fact, if you think about that for a moment, time frames don’t actually exist in reality. They are just a way that we use to see what the price is doing from a different perspective, using a different zoom.
The price actually moves the same way in all time frames. If the price goes up 50 points in the 2-minute time frame, it will also go up 50 points in the 15-minute time frame, or even in the daily time frame.
The moves are all the same, regardless of the time frame that you are using.
And the same principle also applies to tick charts, Heiken Ashi charts, Renko charts, you name it… Everything is the same.
Why do you trade such a low time frame?
It’s all about gaining experience faster.
Success in trading, mastering in trading, and profitability in trading don’t happen before the trader gains experience.
And every single person that puts a step into trading, wants to be successful, wants to make money… before gaining experience.
You need to practice and fail a lot of times in order to be successful. Any success that you get, before you have the experience, it’s nothing but luck.
Money doesn’t come overnight.
When you trade a low time frame, like 5 minutes, 2 minutes, or even 1 minute, things happen much faster.
And if you want to gain experience faster, you need to trade a low time frame.
You have to experience several times all the scenarios that the market presents to you:
- You have a faster acknowledgment between a ranging market and a trending market.
- You quickly learn how to adapt to trend changes.
- Several times a day you see bull markets and market crashes.
And you know what, most people that trade long-term, need to wait 10 years or more before they experience their first market crash.
Using lower time frames, you experience those bull markets and market crashes several times a day.
You get to a point, where you saw what the market is doing right now so many times, that you can repeat it almost while you sleep.
That should be your first goal, gain enough experience.
And when you master it, then you can handle any time frame.
If you know how to handle a low time frame, you can handle any other time frame. You already gained the bank of experience that you need to be successful.
Can’t you learn how to trade using higher time frames?
Yes, you can, of course.
And if you don’t have time to practice during the day, because you may have a job or have to attend classes, or whatever other reason doesn’t give you time to trade during the day. You have the option of practicing in higher time frames.
Your learning curve will just take more time to develop.
And regardless of the time frame that you use to practice, when you have the necessary experience, you can use the lower time frames to make potential fast profits.
Potential fast profits, I like that!
You know, you only need to take 1 or 2 trades a day to make your trading day and the potential daily profit.
You don’t need to spend the whole day in front of your computer.
You have so many opportunities in low time frames, that in 30 min to 1 hour, sometimes even less, you can make your day, close your computer and enjoy life.
That’s what the trading lifestyle is about.
It’s not about expensive cars, luxury houses, and yachts. It’s about the freedom to work when we want, the freedom to work from where we want, and the freedom to enjoy our life.
How much time does a trade long in a low time frame?
We opt to trade using the M1 and M2 time frames because we want our trades to last a specific amount of time, the minimum possible.
Most of the time, when going just for a 1-1 risk-reward trade, 2 or 3 bars are enough to close a trade. To catch one single leg and get out.
But let’s say that you want to capture a bigger move, for a better risk-reward ratio.
Well, you enter your trade, then after a leg in your direction, the price will tend to make a pullback, before it makes a second leg in your direction.
Imagining that you entered long on a trade, we can expect something like:
- 3 bigger bars going up
- 2 smaller bars going down (pullback)
- 3 bigger bars going up again
That’s a total of 8 bars.
This way you can use the 8-bar trading rule to set the time expectation between the opening and closing of your trade.
That means that a trade usually lasts for no more than 8-10 bars, regardless of the time frame chosen to trade. Of course, this is an average, sometimes we achieve our profit in one single bar, or 1 single minute after we open the trade.
Using a 2-minute time frame for day trading, our trades will last on average no more than 16-20 minutes.
We choose to focus on just 20-30 minutes a day because that way we have 30 minutes to find a good setup, get in, and get out of the market.
The day is done after that!
We may leave the trading room and live our lives!
Before continuing, check the following table to know the maximum average time that your trade will last open on the market:
So, how do I decide what’s the best time frame to trade?
After you gain the necessary bank of experience using low time frames, you can switch to other time frames. You first need to decide:
- how long do you want your money to be exposed to the market?
- how much time do you have (or want) to trade every day?
If you have limited time and want to day trade, you should choose a lower time frame, like M1, M2, or M5.
If you want to be with the markets the whole day, day trading, you can go to a higher time frame, like M15-H1.
If you only have time to watch the markets at night, then you should opt to choose a higher time frame, from H4 to Daily.
That way you only need to spend a few minutes every night to analyze the markets, manage open trades, and check for new opportunities on your trading charts.
Finally, if you only want to check your trading charts once a week, you should definitely opt to use the highest time frames available, like the Weekly, or even the Monthly.
Open your charts once a week to identify setups for opening new trades, and then let them run for a few weeks, or even months.
So, remember, gain experience first, the quicker the better, and the profits will appear as a consequence of good trading.