How do I choose the best time-frame for Forex trading?

In previous posts we have looked at day-trading, scalping (taking profits from shorter movements of the market) and swing-trading (following market trends over periods of a day or more). But how do you know which is the best trading style for YOU?

A few weeks ago (January 12/13) we looked at the global Forex market and identified the best trading times from the market point of view. These were 2-4 a.m. EST and 8 a.m.-12 noon EST. But of course at any time round the clock there are some markets open. Obviously, not everyone can be, or wants to be, awake to trade in the small hours of the morning, so it partly depends on where in the world you live and what time-zone you are in.

Easy-Forex makes it very easy to trade at any point in the 24 hours because they do not use software, which would be dependent on the terminals being open. They provide a fully web-based service which you can log into at any time. In addition, the Easy-Forex trading platform uses web services to fetch the most current exchange rates on a non-stop basis. The most recent data displays without the need to refresh the page. This includes account status screens such as "My Position", which updates continuously to reflect changes in rates and other real-time elements.

So which time-frame you use for Forex trading depends largely on your own preference as well as the way prices move in the different time frames. For instance, you can trade the hourly and 4-hourly charts. But if the system requires that you adjust your stops below a trough as the trough occurs, you may need to be awake at 3 a.m. to do it.

Alternatively there are systems that trade the 5-minute charts - this way you trade for 3-4 hours a day and then stop. You can trade again that day or a different day. Many people find this more convenient as it's a discrete time period. But it's advisable to choose a time of day that coincides with one of the most active periods of the market, as above.

Again, you can trade the daily charts, but if you place stops below the troughs the loss risk can be very large.

So the time frame you choose to trade Forex will depend on your preferred system, your preference for a discrete time period or otherwise, and what time zone you live in.

Don't forget you can find out more at http://www.bizwrite.co.uk/Forex/forexindex.html