When you trade currencies, you need to decide what time frame you wish to trade and you have a choice of three time frames – Intra day (day trading), swing trading ( a day to around a week) or long term trend following (a week or longer), here we will look at the time frames and the advantages and disadvantages of each.

One of the methods below, you should not use in my view and of the two you should use, the one you pick will depend on your personality...

Long Term Trend Following

Long-term traders will usually use both the daily and weekly charts with t he weekly charts used to establish the longer term trend while the daily is used for placing trading signals. Trades can last from a few weeks to many months, or sometimes even years.

Advantages

Don’t have to watch markets intra-day and you spend less time on your trading in addition, fewer transactions means less paying of spreads

Disadvantages

Large swings can occur which require large stops, also discipline is required to hold long term trends as open equity swings can eat into profits. Trend following also requires patience to wait for the right opportunities

Swing Trading

Swing traders use daily charts and and hold trades for a day to around a week.

Advantages

More opportunities to trade and less discipline is required, as profits and losses come quickly and stops can be closer.

Disadvantages

Transaction costs will be higher than trend following and more time is needed to trade

Day Trading

 Intraday traders or scalpers use minute charts such as 1-minute or 5-minute. Trades are held intraday and exited by

Advantages

Lots of trading opportunities and no overnight risk

Disadvantages

Transaction costs will be much higher (more spreads to pay) Mentally more difficult due to frequency of trading and far more time consuming than the other two trading methods Profits are limited by needing to exit at the end of the session.

Which is the Best Method for You?

The best method is really between swing trading and trend following – if you are a disciplined trader and like to spend the minimum of time on your currency trading, then trend following will suit you. If you lack discipline and want more excitement, then swing trading is the option you should choose. Day trading is hard and has got harder, as instant price information is available to all and this makes all daily movements random and when this occurs, you can get the odds on your side and you cant win. So if you are looking for the best time frame to trade in currencies choose between swing trading and trend following. Both methods make money and the choice you will make will depend on your personality.