It is important to look at time frames larger than the ones that you have chosen to trade in. Many Forex traders decide to just focus in on their chosen time frames, but this is just being narrow-minded.
Time frames in Forex trading are important and you should definitely choose good ones that are the best, most suitable and most appropriate for you and your Forex trading strategy. However, you shouldn’t just ignore other time frames, because it’s a good idea to get the bigger picture. Too many Forex traders ignore ones that they don’t work within; they don’t look at them at all and as a result, they don’t look at the bigger picture. This is of course not ideal.
Now admittedly, this doesn’t include scalpers and day traders. Scalpers for example, can often be in and out of single trades in seconds, so there’s no real need for those using these types of Forex trading strategies to look at the bigger picture.
The majority of traders and investors in the Forex market though, don’t use scalping strategies. Beginners definitely shouldn’t scalp the currency market, since it can be very difficult to scalp successfully without a lot of previous Forex trading experience. So, if you don’t scalp or use a day trading strategy of some sort, then you should definitely be looking at the bigger picture.
By looking at wider time frames, you will be able to see what the prices of the currency pairs you are trading are really doing in the long run and what direction they are actually moving in long-term. By doing this, you will find it far easier to define currency pair price trends. Do bear in mind though, that you don’t have to look at very long-term price charts and graphs if you are only trading within 15 minute time frames, for example. If you trade within 15 minute time frames, you might want to consider looking at 1 hour price charts and graphs perhaps. If you trade within 1 hour time frames, you might want to consider taking into account daily or even weekly price charts and graphs.
The FX market is always moving either up or down, so if you ever begin to struggle finding trends within your chosen time frames, then either choose larger ones or just take larger ones into account so that you can get more of an idea of the currency pair(s) you are trading. Remember, even if you aren’t struggling, you should still know what the most prominent trend is in the market for the currency pair(s) you are trading. It will just put you at an easy advantage, since you will essentially be more aware than others who don’t bother to consider wider time frames. If you can put yourself at an advantage, you should do so, especially if it doesn’t take a lot of effort.
In conclusion, it is highly recommended that you take the time to look at larger time frames than the ones you have chosen to trade within. By doing this, you will stand more of a chance of making consistent profits, since you will know the general direction in which the currency pair(s) you are trading is moving in, which will in turn give you an edge. It isn’t completely necessary to take into account larger time frames in Forex trading, but it is definitely a good idea and it doesn’t take a lot of effort to do so, so you may as well.