So I’ve been wondering, why do people use different timeframes on their charts? What is the most common timeframe used to look for candle patterns before making decisions? I ask this because there are a few times where I’ll look at a 30 minute chart, but then that looks completely different than the 15 minute chart or the 1 minute chart. When looking at a timeframe chart, do you also only look at the chart for the day or for a longer timeframe(5 day, 10 day, monthly?)
The timeframe dictates the length of the trade. On average, the 5min chart is for daily trades, the 30min chart is for trades that will last few days to a week, the daily chart is for trades that last up to few weeks.
The timeframe also dictates the size of the position, trading style, risk and profit margins. Scalpers use tick and minute charts, while long-swing traders use weekly and monthly charts (the two extremes). In between there’s swing, range, and momentum traders.
The most common timeframes to look at are the minute ones (1, 5, 15 with the daily), but that’s also where most of net loss trading is (day trading).
The relation between timeframes is complicated, and there’s different theories of how to use them together depending on the trading strategy. A rule of thumb is to always look at the daily trend, and check if the trend on your timeframe is confirmed by the one step higher timeframe (5 and 15, or 30 and 1h, 1h and 4h etc.). Additionally, looking at a lower timeframe sometimes helps getting a better resolution for entry, but it can be paralyzing as you keep going lower and lower, so most of the time it isn’t recommended.