The issue of beginning to trade is surrounded by argument. Unfortunately, there is no final truth, otherwise much more people will be making money in the market. However, beginners still need some advice, trading options as landmarks on their complicated way. The first question that a beginners asks in the market is which timeframe is suitable for them.
Again there is no unequivocal answer, yet there are principles of each trading style and timeframe. Knowing them, a beginner will have less trouble deciding which one to choose. Moreover, knowing their character and personal traits, the trader can make parallels between them and certain trading styles.
Let us start with two or three popular trading timeframes, often recommended for beginners. They are D1, H4, and sometimes W1 (which are the daily, four-hour, and weekly TFs, respectively).
What D1 gives us
D1 allows for trading just candlestick patterns, i.e. the situation on the chart is considered only after the candlestick closes (once a day). Trading patterns that consist of several candlesticks is rather difficult because they need time to form.
The best part here is that trading requires from the market player 20–30 minutes a day. If the trader has a lot of instruments (100 and more), this means 10–20 trades a month. If the trades are of good quality, they bring a substantial revenue of 5-15% a month.
The issue is, trades in D1 do not close in a day or two. Profitable positions might remain open for a month, or two, or sometimes even three. It must also be said that for those trading this way having other tasks is essential.
Something has to get the trader distracted from the market, so that they did not look up the trading terminal 29 times a day. The only time when they need to remember about the market is the closing of the daily candlestick. A more or less large deposit will be good because profit might be not that large due to the scarcity of signals.
Advantages and drawbacks of trading by D1
The main advantage of such trading is having time to take a calm look at the market, analyze risks, and even seek someone's advice before opening a position.
The main drawback is that you will be gaining experience much slower than with scalping or day-trading. Of course, some traders manage to make 20 trades a month, but for D1 this is the limit, something like machine gun shooting.
A word about H4 and W1
What about H4 and W1? D1 is the main TF for positional trading, while H4 and W1 are certain deviations from it depending on the style of the positional trader. In other words, if signals are few but you do not want to switch to intraday trading, try out H4 that produces 6 candlesticks in 24 hours. Also, H4 is useful for entering D1 combinations more accurately. This helps to reduce risks and increase the trader's potential.
W1 is for those who have a lot of patience, work with lots of instruments (200 and more), and generally belong more to investors than traders. Expected length of trades on this TF is 6 months and more. Here, one needs to hit the goal precisely because losing trades can remain open for a couple of months for no good.
So, if one enjoys their life and want a passive income, D1 will suit them best. Also, if the trader is already experienced but tired of constantly monitoring the market, it is time to switch to D1. However, this TF is not the best option for those who imagine trading as constant control over the situation and every price movement.
By Dmitriy Gurkovskiy, Chief Analyst at RoboForex
