When you use forex charts you will notice that there are a number of different timeframes that they fall into. To correctly use the forex charts you need to know what each timeframe will be used for. These timeframes are important not only for technical traders, but for fundamental traders as well. This is due to the fact that all traders will make use of forex charts at some point in their trading.
The Different Forex Charts Timeframes
Before you can look at the ways to use the different forex charts timeframes you need to consider what these are. Like all things in forex you can divide the forex charts into long, medium and short-term charts. The long-term charts are the yearly, monthly and weekly charts. However, the weekly charts can also fall into the medium-term charts along with the daily charts. Again the daily charts will also be part of two chart categories. These categories are the medium-term charts and the short-term charts. The other short-term charts will be the hourly, 15 minute, 5 minute and 1 minute charts.
The Use of Long-Term Charts
The long-term charts are used for the direction of the overall movement of the market. Most traders should consider what these trends and movements are. The long-term directional movement of the market does have an effect on the short-term trends on the market.
Long-term traders are the ones who are going to be using these charts the most. Position trading is the most commonly used strategy when you are considering these forex charts. This is due to the long-term nature of the trading where you are holding trades for weeks.
The Use of Medium-Term Charts
Medium-term charts are going to be used by medium and short-term traders. The short-term traders are going to use these charts to determine what the direction of the market is in the shorter term. This direction will affect these traders more than the direction that you get from the long-term charts.
The medium-term traders who are mostly swing traders will use these charts to find the trends that they are going to trade on. However, they will not actually use these charts to find the entry points to the market. This is something that would be too vague on the medium-term charts.
The Use of Short-Term Charts
Short-term charts will be used by all traders to find their entry points into the market. The exact chart that is going to be used will vary depending on the strategy that is being used. When you are using a long-term trading strategy then you are more likely to use the day charts for your entry. However, if you are using a day trading strategy then you are more likely to use the 5 minute charts for an entry point.
The short-term traders will also use these charts to determine what they are going to trade on. The charts that are most commonly used for this will be the hourly and 15 minute charts depending on the strategy that the trader is using. The 5 and 1 minute charts will not be used for this purpose.