Most traders have a default timeframe they trade off. Maybe it is the 1-minute chart, 5-minute chart, or the hourly chart. Sometimes there just aren’t good opportunities on the chart we are looking at though, even if we trade multiple instruments. In times like this you may want to look for good opportunities on other timeframes (hourly, four-hour or daily charts), instead of trying to trade poor quality signals on your timeframe.
While trading on a different timeframe may seem a bit uncomfortable, you’ll notice that many patterns and trade setups occur on all timeframes, not just one.
To get valid signals on other timeframes, you may need to adjust your indicators to compensate, as many methods and strategies are designed for use on one timeframe, and may need to be recalibrated to work effectively for the different timeframe.
No matter what timeframe you trade on, control your risk. I never risk more than 1% of my account on a single trade. So that means on a $5000 account, you can lose $50 per trade. I stick to that 1% rule whether I am trading a 1-minute chart or a daily chart.
If you usually look for trades on a 1-minute chart, but aren’t seeing any, look at a 5-minute chart. By moving up to the next timeframe you may see something you missed on the 1-minute chart. If you still don’t see anything on the 5-minute, then work up to the 15-minute chart and so on.
If you usually use a 15-minute chart, work up the 30-minute, and the hourly chart to see if you spot opportunities there.
By going through this process, not only are you potentially going to see trade opportunities, you get a broader context of what is happening on your normal timeframe.
It is always best continually monitor at least two timeframes. For example, when I trade the 1-minute chart I always flip back to a 5-minute chart as well so I can see a bit more of the price action and the larger trends and patterns in play. For more on this topic, see: Only Looking at One Timeframe? You’re Likely Missing Something.
Prepare for Longer or Shorter Trades
When moving to a shorter time frame, things will seem to move quicker. No matter what time frame you trade on the market is moving the same amount, but on longer-term frames you see less price data so there is less information to absorb. On shorter timeframes, you see more bars, more price data and it can be a bit overwhelming at first.
Before trading on a different timeframe, acclimatize yourself to the environment. If you typically trade off a 5-minute chart, but see an opportunity on the 30-minute chart, that 30-minute is typically going to last longer than a trade on a 5-minute chart.
My trades on the 1-minute chart usually last 3 to 10 minutes. But an opportunity I see on the daily chart, may take several days before the positions creeps well into the money.
If you usually trade on an hourly chart and drop down a 15-minute chart, you will likely see profits (and losses) materialize more quickly. This should be accounted for when planning your trades.
Viewing different timeframes is likely to improve your trading. It will provide you with a better context of what is happening in your asset overall, and will also help you find opportunities when you aren’t seeing any. Be sure to recalibrate both yourself and your indicators if you trade on a different timeframe. You are used to trading a certain way on a specific timeframe, so be sure to check out some other timeframes and play with them in a demo account before using real capital. Also, update your trading plan to include trades on other timeframes.