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IQ Option has released a new guide to time frames so that you can be in the right asset at the right time.
As any trader will tell you, making money by investing is a matter of timing. Those people who picked up Microsoft or Apple stocks at the turn of the century are the perfect example of that, as are those who sold up too soon and have had to live with that regret for the rest of their lives. As such, the importance of timing in trading is one of the most crucial tools in your arsenal. It is all well and good knowing trade techniques, but without getting the timing right you will be a day late and many bucks short.
Fortunately, IQ Option have released their latest guide which focuses directly on “what time frame to trade and what time frame to analyze?”. In this guide, they outline how to analyse appropriate time-specific data in order to achieve success. While they note that historical data is important, the tendency to over analyse this and look too far back is sometimes problematic. Naturally, you can’t ignore the past but it is all about finding the right past to look into.
As a trader, you need to know both the historical track record of your investment and the more recent activity it has demonstrated to best ensure you know what will happen in the here and now and, more importantly, into the future. IQ option makes this possible but offering you time frames that range from just a few seconds to one month.
As per IQ Option, “choosing the right time frame is essential for every technical analyst, as it can help gather relevant information and manage the risk of acting upon false signals”. With this considered, they have detailed a couple of options to help you with your time frame management which can be used reflective of the assets you are hoping to trade, because as they point out; different asset classes benefit from different time frames.
Notably, stocks that have low volatility, such as commodities and ETFs, should have a more longitudinal approach as they are traded over long periods and so a longer time frame should be chosen accordingly. On the flip side, when you are ForEx trading and are looking at the value of currencies, these can change a lot more in a short period of time so you need to more on the ball and ensure you are using shorter time frames. As such, you need to consider what you are trading and then cater your time frames to that.
This is the first step. Then you have to consider yourself and your own personal trading style. They note that on “the bigger the scale, the more reliable are the signals observed and the fewer of them will be received. Conversely, on a small scale, you will have more incentives to open and close the trade, often driven by market noise (random price movements that are not reflective of the overall market sentiment).”
As such, it is important to find the right middle ground where you feel comfortable monitoring but is still going to provide accuracy and finding the right balance. IQ Option recommends longer time frames to “novice” traders to ensure they can get their heads around it. Once you are comfortable with longer time frames, you can move on to short ones. However, why just one time frame? IQ Option also makes a case for the benefits of having multiple time frames that you refer to as these will help compare and contrast them but, again, walk before you can run.
If you are interested in learning more than you can read the full guide at IQ Option.