Happy April Fools Day!
Some food for thought: Over the past twelve months I have traded, nearly exclusively, using the 5-minute timeframe as the execution timeframe – meaning that is the timeframe I am using to identify trade setups.
This week I have started doing some testing in Forextester2. Even in a testing mode I am finding trading quite tricky and confusing at the moment, and I realised this is partly because there is so much information, and so many candlesticks, to consider on the 5M timeframe. I started looking at the 1H chart for setups.
Advantages of using 1H timeframe
- No trade entry prior to 8am, meaning it is sufficient for me to come to the office a bit later, rather than aiming to be ready at 7:00am or 7:30am
- There will be less information to digest – 1/12th the number of candles compared to the 5M timeframe
- Stops will be wider, meaning that proportional transaction costs will decrease, which also opens up the number of instruments that I can trade – currently some instruments are excluded due to spreads being too high.
- Thus, allows me to monitor more instruments – so can still make up a large number of trades
- Trade Entry is much clearer compared to 5M XTF – there’s much less noise
- Trade Management becomes easier/simpler
- Generally speaking, technical patterns tend to be more reliable the higher timeframes, thus 1H patterns should be more reliable than 5M patterns.
- Testing will be easier
- All in all, the days should be less stressful
I guess this would boil down to looking for simpler setups across a larger range of instruments, as opposed to looking for more complex setups across a small basket of instruments.
Any insights/comments from readers?
I will be in Greece for the first two days of next week looking at some property deals down there. Should be back in the trading office for Wed to Fri, and planning to work on 1H-based testing for 3 solid days. I will provide a progress update at the end of the week.