He has a monthly readership of , traders and has taught over 20, students. The reality of the situation is that the lower in time frame you go the less accurate any trade setup becomes , therefore, by trading lower time frame charts all you are doing is lowering the probability that any trade you take will be a winner by adding more variables to the equation of forex trading.
Anyone who has been following my articles knows that I often talk about how dangerous it is to over-complicate your trading and that the keys to forex success are having the patience to wait for the best trade setup and thoroughly understanding forex risk to reward scenarios. Therefore, this article will discuss the advantages of trading the higher time frame charts and how they can help you become a patient and profitable trader.
One of the biggest advantages of trading the higher time frame charts is that they act like filters of price movement. The noise of the lower time frames is basically just price movement that is so erratic that it cannot be reliably used to make trading decisions; however, many traders get tempted by this erratic price movement because the human mind naturally tries to find patterns in nature and in the financial markets.
When you trade the higher time frames you get a clearer picture of what is really happening in the market because most of the erratic market noise of the lower time frames is eliminated. For example, if you see what looks like a large up move on a 30 minute chart, it might just be the beginning of a daily bearish pin bar, but if you were trading the 30 minute chart you might see this big move and then find a reason to jump on board only to have it come crashing down against you into the daily close.
There are so many opportunities on the 4 hour and daily charts that concentrating your mental energy on lower time frames is simply an inefficient and ineffective use of time. Traders need to understand that the market will still be there tomorrow and the next day and for the rest of their lives, so missing out on a few good opportunities per week on the lower time frames is more than worth the sacrifice when you consider there will always be more accurate opportunities on the higher time frames.
Simplicity is one of the keys to forex trading success , it is very important to keep your technical trading strategy simple in design and implementation, because over-complicating your trading is a sure-fire way to begin committing emotional trading mistakes. When traders begin trading on lower time frame charts they start over-complicating the trading process by trying to read the inherent noise that is a part of these fast moving charts, this inevitably causes them to over-trade which is one of the main causes of failure in the forex market.
Remember, keep it simple stupid. Higher time frame charts provide a much more useful and accurate depiction of price movement, this will enable you to be more confident in your trading decisions which will begin reinforcing a series of positive forex trading habits. Many traders struggle for years trying to trade lower time frame charts, eventually they either give up all together because they have lost too much money to bear, or they figure out that trading the higher time frames is a necessary component to consistent trading success.
By understanding this fact now, hopefully before you have lost much money in the market, you can begin to focus your time and energy on the higher time frames and avoid the struggle and frustration that comes with trying to analyze the noise of lower time frame forex charts.
It is no big surprise that traders who take a longer-term view of the market and trade higher time frames make more money, on average, than day traders.
The reason why is because higher time frame traders naturally take far fewer trades than day traders or traders who mainly trade lower time frame charts. One of the most lucrative trading traits you can possess is patience; it is often overlooked by traders because so many of them erroneously believe that more is better in every aspect as it relates to forex trading.
You will naturally take fewer trades when you stick to the higher time frames, assuming that you know what to look for and have the patience to wait for the trade setup you are looking for. By focusing on the higher time frames you also work to influence and develop the proper trading mindset. By trading less frequently you will naturally become a more objective trader because you will not be over-analyzing the market, trying to manifest trading signals on every time frame.
Being an objective trader is different from being a fearful trader, objective traders know what they are looking for and when they see it they pounce on it like a tiger stalking its prey, fearful traders cannot act even when they see what they are looking for in the market. So, make sure you do not become a fearful trader , master your trading strategy first, this way you know what to look for, then wait patiently as the market plays out and the amateurs lose money on the lower time frames, when you spot your higher time frame trade setup you execute the trade with confidence and serenity.
Finally, perhaps the most important reason you should stick to the higher time frames when trading the forex market is because they add weight to your trading strategy. As a price action trader, I know that a daily pin bar setup is much stronger than a 30 minute pin bar setup; therefore, because I have this knowledge I simply prefer to wait patiently for the perfect daily pin bar setup rather than frazzle my nerves and lose money trying to catch a rare high-quality 30 minute bar setup.
Furthermore, I have better things to do with my time than sit around all day and night staring at a 30 minute chart, and I assume you do too. Price action trading is especially impactful on the higher time frames because price action is naturally the clearest and purist reflection of aggregate market sentiment.
When you combine the inherent clarity and effectiveness of price action trading with the power of trading higher time frames in forex, you have a very accurate forex trading strategy.
Fuller Wonderful information about time frames i have the same idea thanks. I agree that higher time-frames should be included in trading, but there is another side to the coin, which is not mentioned here.
If you are trading off the daily, you must be mentally prepared to sit through big retracements. Not everyone can emotionally withstand the ebb and flow of the market. It is important to find your personal time-frame groove first. I can imagine that for many people this will not be the daily time-frame. Excellent article for people wasting and loosing money with shorter time frame. Your strategies actually work!
Last month the idea of finding good RRR popped out of my mind, i try to work it out on how to fit this into market together with a good RRR but only has a little improvement because still trading on H1 chart. Then miracle happened when i decided to give a try on H4 and higher timeframe chart. Never thought it would be so powerful by using all of them together. It is true that beginner must master daily chart first and learn how the market move before moving to lower timeframe H1 or setting own indicator.
Finally I have little grasp on how the market move and knowing why I failed on H1 chart. Will keep monitoring my performance.
I dont entirely agree with this article. Shorter time frames have their own uses and i believe this depends on if you are a day trader, medium term trader or a long term trader. Hi Niall, Thanks for your posts , its amazing how higher time frames has improved my trading. This may be slightly off topic but do your setups and advice to use higher time frames work for trading indexes?
Really enjoying your articles and tempted to give forex a try on demo account, I started by looking at index trading. So, to keep in tune with them, one need to follow them on the higher time frame charts. What an eye-opening article, keep them flowing. Great piece of advice. Have been trading 15 min chart and now at 1 hr will move to 4 hrs immediately. Quantum physicists know the smaller the time frame, events in nature become more chaotic and unpredictable. At higher time frames, Newtonian deterministic laws kick in.
Nature is trying to tell us to stay out of the tiny time frame domain to avoid unpredictable randomness. The same principle applies to trading. Its very good insight for me that why to trade on higher time frame? Hello Nial, thank you for sharing your knowledge and for all the articles.
They are very useful. I look forward to taking your course soon. I will sign up for your course by the end of this month,I promise. Hi Nial, These are articles are very good. I have never found this sort of help before.
Hopefully this is a new beginig. Trade a micro account. A small account does not limit your ability to trade higher timeframes, that is often peoples perception, but in reality, account size is meaningless. Your trading is measured in risk reward, so you must adjust position size , thats all you need to do. Thanks Nial, these trading lessons are very important to me that I am starting to trade with price action.
I will now adhere strictly to it. And thanks for being so truthful about the whole issue. I can only promise to strictly adhere to tips. Thank you so very much. Thank you very much Nial, your lessons get me out my confusions with trading. It will help improve my trading and will change my trading style. Thank you Nial for this last article. It confirms what I have learned the last year of trading. I have been listening to too much noise in the market. But I am learning from experience that I would rather miss a few trades and wait on Higher TF setups that are a higher percentage of good trades.
Thanks again for all your articles. Thank you Mr Nial for your new advice article, most of the time I spend my day in front of the computer with 1hr time frame end up lost. Okay start from to day I start to look at 4hrs time frame but a little bit boring for a start.
Anyway thanks or your advice. Nial is right in his view of the market. If you are not a member yet,and you have the money to pay and are still struggling with trading, then you are a proud trader. Kill your pride,join the course and be mentored. And when a good setup actualy does showup, you will be to afriad to take. The D1 is the holy grail, give it a try. Commercial Traders are higher time frame traders.
Billionaires Warren Buffet and George Soros are also higher time frame traders. Nial This lesson really hits home I realise now the time I have waisted on 15 minute charts. I have had my first visit to the members forum and with luck make some progress. I find myself less stressed this way.
But what I am trying to do when I find a high probability setup is zoom into smaller time frames like the 1 hour to look for price action. I still need sometime which i am willing to spend to master this methodology. I have always sticked with H4 and since I added the Daily, I have gotten tremendously good! This is an absolute truth.
A truth I had to learn the hard way. Luckily it was on my demo account. Less stress and a higher ratio of winners to losers on the daily chart.More...