You can look at past performance by observing any time frame you want.
You can either look at the monthly chart where every candlestick represents price action within one month or look at 1-minute candlestick that includes all price action that happened in that specific minute.
Since, there are too many time frames such as monthly, weekly, daily, hourly, which one should you use?
This question is different to everyone.
For someone wants to trade every day, lower time frames will be more important.
However, for someone that likes long-term trades or he is doing trading part time so he cannot afford his whole day to trading, higher time frames should be the main focus.
Let’s start with the monthly time frame.
This time frame includes the main point of price action that happened in that month.
It will show you the opening price of that month, the highest and the lowest price and as well as the closing price.
Is this enough to give the whole picture of price action that happened in that month?
What you get is the range where the price was in that month.
This range is important because it marks important areas where price find support or resistance and we suggest you to mark and monitor these areas because they can be important in next month too.
In order to get more info of the price action, we skip to the weekly time frame that consists of opening, the highest, the lowest and the closing price of a week.
Still, not enough to see what price was doing but the same as monthly, it marks important areas where there was a change in the price.
Maybe it was a historical price point that played out again.
What you want to do is to observe that point in future because it may act as a support or resistance again.
The first time frame where we can see more detail what price is doing is the daily time frame.
Every candlestick is showing you what happened in a single day.
Going lower, we come across different time frames such as 12h, 6h, 4h, 2h, 1h, 15m, 5m.
The lower you go, the more data you get but at the same time the less accurate.
On the 5-minute chart, we can see a fake sign that won’t affect too much general trend because one day will include 288 5-minute candlesticks.
Do you think one or two will matter too much?
We would like to point out 3 important lower time frames: 4-hour (H4), 1-hour (H1) and 15-minute (M15).
H4 is an important time frame because it shows intraday price action more specific than the daily time frame.
Every day consists of 6 H4 candlesticks which gives you much more information than a single daily candlestick.
Hourly time frames will point out what happened in every single hour and it goes even more in details of showing you more detailed price action than higher time frames.
This time frame is great for getting confirmation on your entry setup.
The 15M is the lowest time frame we like to look at.
Going below this time frame doesn’t make too much sense.
Even this time frame is too small but it has an important role for day traders that we will cover in the lesson about day trading.
Higher time frames such as monthly, weekly and daily are used for identifying trend directions.
Mid time frames such as daily and H4 are used for identifying potential trade opportunity (trade setup) and lower time frames such as H4, H1 and M15 are used for entry confirmation.
Depending on which trading style you are, you will be using different time frames and looking from a different perspective.
In the next lesson, we will go through different trading styles.
Milos is an independent trader, with a background in journalism and publishing. Nomadic by nature, he’s lived in four different countries this decade. He’s fascinated by Blockchain technologies’ potential to reshape all aspects of our lives. Milos got into Bitcoin while completing his degree and hasn’t looked back since, writing about anything crypto-related. He is the co-founder of the Cryptoaims and he has a strong passion to educate people about this revolutionary technology.