Multiple Time Frame Analysis
Technical indicators are useful tools to analyses the price movements and filter out false signals.
Most of the time traders conduct few other forms of analysis to confirm the changes, this method simply illustrate the same currency pairs in different time frames, the time frames can be 15 minutes up to long as one-week analyses.
The only reason for this time frame is that some trends are clearer with the long-time passage, but long as one week not long as month or years.
And meanwhile, some trends are clearer in a shorter time span so with that view it is quite smarter to explore both time frames to better understand the trends.
There are no definite rules that illustrate properly that this time frame is always right about a particular currency pair.
You have to determine it according to the nature of your trade currency and trading style that works best for you.
If you are a swing trader then you must like to see the daily charts, and four hours charts, if you are a scalp trader then you must like to see one hour or 15 minutes charts points.
Some traders like to work for a short time period as a scalp and swing type of traders because they are more comfortable to the short price effects either because they are risk aversive or because they want to invest in new opportunities every time and others like to trade for long term and they are comfortable with the high price impacts over the long run because they are comfortable with long term price impacts and wants to keep themselves relax.
Of course, there are advantages and disadvantages to different time frames.
Here we illustrate few:
for instance, the long term trade advantage is that you will not have to watch the intraday movements and fewer transactions mean less time to pay the spread and disadvantages of the long time frame is Patience is required and the bigger account is needed.
Short term trade advantages are that you have more trading opportunities, less chance of losing and disadvantages may include high transaction cost and overnight risk can be a big factor, limited profit and need to change biases frequently.