With hundreds of different pair combinations and time frames ranging from 1 minute to 1 month, there is a lot of choice on offer. You are free to choose from all of these, but we all want to make sure we choose the best options.
Whilst there is no simple answer to this, we can break the choices up so that you find the best time frames and pairs for your preferences!
Trade What Suits You
The first step in figuring out the best pairs and time frames for you is to find the right choices for your style of trading.
But what does that mean if you have not traded yet?
Well, trying your hand at different types of trading will be the best way of knowing what you prefer. However, you can ask yourself some questions at the start which will help direct you to the likely best fit.
The easiest question to ask yourself is how much time you can dedicate to trading.
This is because lower time frames require more time and attention to trade management. If shorter time frames is something you are really passionate about trying, you still can, but being realistic about time limits is important.
How you handle stress is another important factor, or whether or not you want to avoid more stress in your life.
If you have 6 trades open and need to be checking your trades every 30 minutes because you are trading low time frames, you may want to reconsider this style of trading if you can’t handle the stress load.
Fast-paced versus slow-paced trading is often what it comes down to. I have seen traders think one style suits them only to find the other is more suitable.
The most important thing is to go in with an open mind!
You know yourself better than I do, so take the time to ask yourself these questions to get an idea of what will suit you.
Let’s take a look at some of the specifics of choosing the right time frames.
Best Time Frames to Trade Forex
To simplify things, I will split up the different styles of trading into short-term and long-term time frames.
When it comes to short-term time frames, you can go as low as 5 second charts but the reality is that the 1 minute or 5 minute charts will be as low as you go.
If you are looking to get your teeth into scalping, then trading the 1 minute-15 minute charts will be what you are looking for.
This is a fast-paced, stressful style of trading that requires more time and attention. For the most part, I recommend new traders to not start with these low time frames until they consolidate their forex trading knowledge and experience.
So if you want to trade short-term, what is the best time frame to start with?
Well, ranging from the 15 minute up to the 2 hour will be your best bet.
There are plenty of opportunities to trade with these time frames whilst not overwhelming you at the same time. It is important to focus on multiple time frames in your analysis so being open to trading on at least two time frames is also going to help you find more trade setups.
For long-term trading you are looking at trading the 6 hour to weekly charts – it really depends what your definition of “long-term” is.
For my students, I typically recommend the 6 hour up to the Daily time frames.
You will get a couple of trades every week on average and the stress of trading these time frames is considerably less than, say, the 30 minute charts.
These time frames also suit traders who can’t dedicate as much time to trading. Having a trade open on the Daily chart, for example, will typically take a couple of days to hit your target. This means your trade management doesn’t have to be every 30 minutes or hour as you would expect with small time frames.
The best way to figure out the time frame best suited to you is to figure out whether long-term or short-term trading is best for you and then just start trading on one or two time frames.
Through experience and time you will find the time frames that suit you perfectly.
This brings us to the next dimension though: what pairs should you focus on?
Best Forex Pairs to Trade
There is now a vast library of pairs you can trade on the forex market which has complicated things a little. Staring at a list of hundreds of pairs and picking the best one can seem pretty impossible.
Fortunately, you don’t need to do that.
There are certain pairs which are traded more so than others. These are called the ‘Major Pairs’ and for 99.9% of you, these pairs will all be on your watch list.
The reason you want to trade these pairs is that they are the most traded around the world, so liquidity and trading volume are the highest.
That means there are more opportunities to take trades because these pairs are moving the most. For trading, that is undoubtedly what we want!
Another benefit of trading these popular pairs is that the spreads will be tighter, so it costs you less to trade them.
Outside of these four pairs, you can look at AUDUSD, USDCAD, NZDUSD to add to your watch list.
These are known as the ‘commodity pairs’ because they are influenced by commodity prices, which are also traded by a vast majority of forex traders. They also benefit from tighter spreads.
These 7 pairs are a great starting point for your watch list. You can always add or subtract to your watchlist though – you can check out my most recent public analysis session here to see what’s on my list.
There is one small detail that may mean you can trade an ‘exotic’ currency pair. These are the least traded pairs on the market.
If you have specialized knowledge of a country, its politics, markets etc. then you can look to trade that country’s currency. For the vast majority of you, this will not apply. But I wanted to include it because I have seen traders succeed in this area.
So there you have it – the best pairs and time frames you should trade.
The most important part of this process is figuring out what suits you best. What fits me may not fit you, and that’s okay!
As long as you invest time and effort into your trading, you will find the best pairs for you to trade.