When starting to trade in Forex, a trader is faced with the question “What strategy should be used to trade?”. Consider in the article strategies for different timeframes
If you are just starting to study Forex, there may be a problem of information "chaos". It's hard to know where to start. Which is better than candlestick or technical analysis? Which indicators to learn first? Can you immediately install an automatic Expert Advisor or use trading signal services? Our advice: look at the basic technical indicators and create your strategy.
There are different options for classifying strategies. For example:
In this article, examples of strategies are divided by the main time frames (timeframes). Each of them has its characteristics and methods of market analysis.
You can use strategies not only on the recommended timeframes. For testing, choose historical data for the last 2-3 years. Forex is changing rapidly; more "long" intervals will not give the correct information on the current market. Indicators used in strategies are included in the basic set of technical tools in all trading terminals!
The youngest and, accordingly, the most "noisy" timeframe. Transactions last no more than 2-3 minutes, profit 5-7 points. It is for M1 that the most automatic Expert Advisors are offered.
Indicators. Only a brief description, look for more information about the indicators in books on technical analysis and Internet.
Important! The simplicity of M1 is deceptive – it requires a nervous system that is naturally inclined to fast trading, and if there is no such thing, choose more calm options.
"Noise" is less than a minute, but still quite a lot. It is usually used as the lowest timeframe confirming the entry point on the M15 and for trading on the news. It can be used as a working timeframe if you follow the rules of scalping: profit/loss 10-15 points, we close in 10-15 minutes.
If there is a strong trend in profit, we keep the position under control. You can give profit to grow, close at the first reverse candle!
Important. Almost any indicator can be turned into a "scalping" indicator on M1-M5, the main thing is to regularly monitor the market and adjust the parameters, especially in automatic Expert Advisors! Strict money management: small volumes of positions and no 1:500 and 1:1000 in leverage.
The first timeframe on which it becomes possible to correctly assess the situation using technical analysis and open a position using only M15.
Delay can be an advantage for trading high volatility assets such as yen crosses GBB/JPY or EUR/JPY - its «synthetic» candles filter out most false breakouts and entry points well.
Important. When switching from M5 and M1, a decrease in profit is often observed. It seems strange, the theory states the opposite - the higher the timeframe, the more reliable the signal for more profit. The problem of psychology - when leaving short-term transactions, scalping habits remain, it is difficult for a trader to wait even 10-15 minutes for the completion of a transaction. You need to calm down, the results will improve.
For intraday trading, where trades last several hours, a period of 30 minutes works the same way as M5-confirms the opening of the entry point. It can be used as the main one: all the principles of graphical and technical analysis work, there are enough strategies and indicators optimized for M30.
Strategies on M30 minutes are considered moderately aggressive. They are used by traders when there is a lack of time for a detailed analysis and control of the situation, but 2-4 trades per trading day can be executed - enough to make money with reasonable risk.
Importantly. Analysis of the M30 allows you to reduce the influence of fundamental factors: the trader has time to carefully study the economic calendar so as not to open deals at the time of strong speculation. But on a strong trend in 15-30 minutes after the news, it is quite possible to trade.
The timeframe on which professional traders determine the direction of the medium- and long-term trend. There are fewer signals, but they are more reliable for all assets, highly volatile, such as GBP/USD or cross pairs. Disadvantage: a sufficiently large amount of deposit or leverage is required to withstand current drawdowns.
Method of two Stop Loss
Like any other strategy, the H1 timeframe requires proper loss management, and it is much easier to calculate the potential profit. Transactions on average are opened for 3-4 hours, signals appear even less often, so you have to wait a long time for the result. Losses cause additional stress, the desire to return losses on the next signal. The technique of real and subconscious foot helps to remove the emotional factor:
Important. The broker and market makers have direct access to the order flow. They see at which levels there are the most Stop Loss or unprofitable trades. If the hourly strategy works with small stops, they can be easily knocked out by even a small infusion of volumes in both directions, after which the price quickly reverts to the trend.
Beginners should always start with a demo account and basic technical analysis tools. They are tested by practice, described in detail in the literature, and training courses. If the results are consistently positive, you can switch to more complex instruments. The main thing is that the strategy is suitable for you in terms of trading style, money management, and comfort psychologically.