What is the best way to choose a time frame for a binary options chart
The topic of “what is the best time frame to use” in the chart for analysis is almost as old as the binary options charts themselves. Traders are constantly looking for any opportunities, so the study of various opportunities contained in the charts is a fairly common phenomenon for options trading. The truth is that I have seen with my own eyes traders who made quite a lot of money trading with just five-minute charts, and the same with weekly charts, and with every time frame in between. So what makes one time span better than another? Today we will try to figure out how novice binary options traders can choose their time period for the options chart. Of course, if you create your own binary strategy or adjust an existing one.
What is the best time period?
In my opinion, you should not consider the time frame as a component of your strategy, it seems to me that it is best to consider it in comparison with the amount of time that you are willing to devote to trading. Not everyone has 8 hours a day to analyze binary options charts and actively trade throughout the working day. Many of us work full-time, the family also takes up a huge amount of our free time, and we all need to sleep, at least a few hours. So, if you notice that you only have enough time to look at a chart of, say, 20-30 minutes a day, then a scalping strategy using a 5 minute chart is most likely suitable for you.
Also pay attention to the fact that binary strategies also need to be chosen according to their time capabilities.
What we really need to correctly calculate the amount of time we need each day, and decide which time frame works best in our case, is to create our own schedule. For those traders who want to work 4-8 hours a day, they have the opportunity to choose the time frame they want to choose. If you are engaged in trading 1-3 hours a day, then, most likely, it will be better for you to choose a time frame of medium duration, with graphs that display the situation hourly, or large periods of time. And if you trade less than an hour a day, then you really should focus more solely on the 4-hour, daily and weekly charts.
The main reason that underlies our desire to trade in a large time frame is that we want to slow down the chart, namely to increase the opportunity, reduce the errors and fluctuations of the option price displayed on our screen as much as possible. A five-minute binary options chart will have 2888 candles in one day. If you can consider the slightest fluctuations in these candlesticks, due to time constraints, then we are forced to trade only on the basis of minor changes in the data available at the moment. But when we increase the time frame for a longer period of time, such as, for example, 4 hours, or a day, we will be able to see most of the data for the day, just by quickly looking at the graph. Trades on minimum time intervals are called scalping. That is, the trader is trying to cut off the minimum price changes.
What is Multiple Time Frame Analysis?
Another topic that is popular among options traders is the topic of multiple time frame analysis, that is, trading on multiple time frames. Often, traders use more than one time frame for a single currency pair to get a feel for which pair is working on the short, medium and long term. A lot of strategies for options are built on this, traders are looking for trend coincidences.
And another method that I use is to start by analyzing a significant time frame for the general direction of the trend movement, then look at the trading settings, on a chart with a smaller time frame, characterizing the movement in the same direction as the chart for a large time frame. This provides us with the possibility that we are not betting against the general trend. James Stanley has written an excellent work on multiple analysis of time frames, I would advise you to definitely read it to learn more.
How automation allows you to unlock all time frames.
And at the end of the day, if the time frame within which you want to trade is not recommended due to the limited time given to you, then you may want to take advantage of automated trades. Automation allows you to turn the strategy into computer code that will automatically open and close trades based on the created rules, around the clock, all weekdays. This means that you can trade at any time, without restrictions, whenever you want. To do this, many create robots and automatic signals, but the best results are achieved by traders who have created their own options strategy and made all the changes in accordance with their risks.
If we are talking about automated trading, then you can choose several ways. For example, using another trader’s strategy, adapting another trader’s ready-made strategy to your needs, or you have someone who can develop a strategy specifically for you, taking into account all your features. All three options are just opportunities, for example, I have used all three in my trading career.
Findings:
In conclusion, I can say that the choice of time frame is based on the amount of time you spend on the market every day, we can also use multiple time frames in order to improve our strategies, use the automatic trading mode, we are free to trade the way we want. And if you want to experiment with different time frames, download a free Forex demo account with free charts and real-time price fluctuation data.
Happy bidding!
Tagged with: Binary Options Chart
