Key difference between higher and lower timeframe trading

A person can trade the market using hundreds of trading methods. But if you consider the trading timeframe, we can classify the traders as belonging to specific groups. We already know that trading styles vary from scalping to positional trading. So, depending on the trading style, time frames are also available for their betterment. 

This article will describe two different time frames that would be best for the FX Market.

• Lower Time Frame- 1 minute to 15 minutes
• Higher Time Frame- 1 hour to 1 Day

Lower Timeframe

A lower time frame is for the experienced trader. They target a brief period to make a profit. They usually trade in a short time, but the trade count is high. The beginners and intermediate-level traders should not try a lower time frame as this is risky. The price movement is very fast on the lower timeframe. If the trading is just for few trades, it will not be ideal to trade in the lower timeframe.

But the lower timeframe has some significant adverse effects on traders. For your benefit, we are going to highlight the key issues.

Higher loss rate with few wins

The biggest problem with trading in a lower frame of time is losing all profit in a single trade. The chance of winning is meager here. It would be best if you made a relay well strategy to make a profit. Also, on the other hand, you should keep up to date with the trend to make more profit. Always try to have an excellent strategy and ability to bear the high loss. And if you intend to trade in the lower timeframe, check out the demo account at Saxo and boost your trading skills.

Risky event Days

Event day means where some actual events will take place. Like, Quarterly results, monetary policy. Event days can change the entire market scenario. Traders should be aware of the event days to invest their money in a lower timeframe. Price will be fluctuating too much in that time. The risk of the trade is high.

Mental Effect

While trading in a lower frame time, one must control emotion badly. As you are dealing at a lower time frame, the pressure will be high at that moment. We suggest being emotionally intense. Doing something emotionally will not help to make the trade successful. For newcomers, it will always be better to avoid trading in a lower period.

Higher Time Frame

A higher timeframe is primarily suitable for the newcomers because of its more flexible timing. The higher timeframe holds for 1 hour to 1 day. The rate of profit is low here. But it is more consistent. Because of its long timing, the average fluctuation of the candlestick chart is more constant. Because of the timing, the trading assets can be seen anytime from anywhere. You are more flexible to end trading if one thinks the market will go down soon. The rate of winning is also better than the lower frame time. Let’s see the key advantages.

Have a walk while trading

The main benefit of a higher time frame is that anyone doesn’t have to all day long before the screen. You can have a walk here and there, do other works. It is more like a part-time job if anyone is fully committed to other jobs.

Emotions are easy to control

The failure rate is lower here because of its timing. You can have a consistent rate of profit here. The less one is going through the nerve; the better are going to be the decision.

Better risk management

You are going to get a lower “stop-loss,” but the price is going to get will get the higher time of trades with a wider stop-loss frequency. The average movement range will be more prominent with broader targets of assets. That makes less chance of loss.

At last, the trading time is very crucial for the trades accordingly to their category. You can have a look at the article and decide efficiently. The lower timeframe is for experts, the higher timeframe is more suitable for newcomers.