Why you should always trade the higher time frame

Dwayne Buzzell · January 4, 2018

Most retail traders love to trade the lower time frame in the market. They simply think by trading more they will be able to make tons of money. But the professional traders always do the opposite of the new retail traders. Instead of placing too much trades they always trade with an extreme level of patience. They know very well that this market is extremely volatile in nature and a single trading mistake can cause them a huge amount of loss. Some people often say that they want to trade the high impact news just like pro traders. But do you really think that the pro traders trade the news based on lower time frame data only? They use multiple time frame analysis and most importantly they give a great deal of emphasis to the higher time frame data. Today we will discuss why you should always trade the higher time frame to make money.

Saves you from false trading signals

Many traders often say that they are always facing lots of losing trades even after doing all the things perfectly. But do you know the exact reason why? This is simply because they always trade the lower time frame data. In lower time frame trading you will always have to deal with lots of false trading signals. If you are completely new to the trading industry then you need to understand that lower time frame data doesn’t give you the accurate price movement. For instance the in the daily time frame you will see the price trending strong upward but in the 15-minute time frame, you might see strong bearish trend due to a minor retracement of the price.

So when you trade the lower time frame it becomes almost impossible for you to trade with the market trend. But while trading CFDs you need to make sure that you are always placing your trade in favor of the long-term trend. So the best way to do so is to trade the daily time frame. However, if you still want to trade the lower time frame data then you need to learn about multiple time frame analysis. Multiple time frame analysis is nothing but the study of the different time frame data. But when you do so make sure that you give emphasis to the higher time frame data to get the best possible trading signals.

Allows you to aim for big risk-reward trade setup

Finding the high-risk reward trade setup is very crucial to your trading success. You might say that you have all the trading knowledge and you are completely fine to trade with 1:1 risk reward ratio. But if you consider the long-term scenario then you will see that you are often having losing trades. So how do you deal with those losing trades? The simple answer is – aim for high-risk reward trade setup. The expert traders at Saxo often have more losing trades but due to their high-risk reward trade setup, they are always one the profitable side at the end of the month.

Allows you safeguard your investment

When you are trading the higher time frame you are actually following the conservative way of trading. But in the professional field of Forex, you can easily use the aggressive trading system to make more money. It’s true that some traders are making a huge amount of profit from their winners due to big lot size trading but considering the overall performance, they are still on the losing side. But if you trade the higher time frame data you won’t have to risk too much trading capital in any single trade. Most importantly you can easily ride the long-term existing trend of the market without facing any major trouble. And by simply using the trailing stop you can even the long-term trend to its very end.

Noah Jackson · January 4, 2018

All the facts you are saying here is true. But lower time frame has also many benefits. I know this because I have using for lower time frame for several time. Infect I have started my trading career with lower time frame. But to use lower time frame properly trader need a good trading support. Which I got from my broker TopFX24. This broker is MT4 trading platform supported broker and very good for day trading.

Jo Eshuijs · January 5, 2018

Forex4you, presents its clients with a large variation of trading instruments to corporate offers from currency pairs. I am benefited by the variation because it helps me to trade in different categorical ways. It also helps me to exchange by using meta trader 4. My broker uses many technological services which helps me to all time active. Most of the brokers don’t give this type of facilities to their clients, so I am lucky to trade with them.

Jimmy Adams · January 31, 2018

I personally trade on D1. I don't go below D1 time frame. But the problem is you will not get regular entry. Sometimes you may have to wait for weeks for a good entry. I don't try to force the market. If i find any entry according to my entry criteria, I open trade. Otherwise I do not open any trade. Sometimes it difficult to follow the rules. It is MaximusFx, a broker with forex and binary options trading offices. It moreover gives low spreads and the trade execution is instant.