To know the best timeframe to trade boom and crash indices, you need to answer some questions like; “What trading experience do you have in boom and crash markets?”; “How much time do you have to trade per day?”; and “How long are you willing to leave your money on the market?”
Answers to these questions, along with some other factors, will help you determine the best timeframe to trade boom and crash.
In this post, I will give you a quick overview of multi-timeframe analysis, and then show you what you should consider as a lower or higher timeframe as a scalper, daytrader, or swing trader. After that, I will walk you through the best timeframe you should trade with as a day trader, swing trader or scalper.
Table of Contents
Multiple Timeframe Analysis: Its Concept in Boom and Crash Trading.
If you want to stay profitable in your trading career, you need to learn and start trading with price action. Stop jumping from one trading strategy to another. From my experience, traders who rely on combining two or more indicators to form a trading strategy usually end up frustrated.
Take your time to learn the different candlestick patterns and multi-timeframe analysis. These two ideas, along with others , make up price action trading.
Multi-timeframe analysis is the act of monitoring the market on different timeframes. Typically, multi-timeframe analysis begins with the higher timeframe and then extends to the lower timeframe. Traders first identify general market sentiment (trend) with a higher timeframe and then use the lower timeframe to spot entry signals in line with the trend.
What is seen as a higher timeframe is solely dependent on the type of trader you are. Scalpers see the H1 timeframe as a higher timeframe, while swing traders see it as a lower timeframe and therefore use it to enter the market.
So, there is no general rule on the timeframe you should start with in multi-timeframe analysis. If you are a scalper, you can start with the H1 timeframe and then go down to the M5, M2, or M1 chart.
What Timeframe should you start with as a beginner?
Beginners looking to gain faster experience in trading should use the H1 or lower timeframe. Success and profitability in trading don’t just happen at once. You need to practice and fail a lot of times and you can best hasten this by practicing first with lower timeframe.
For instance, if you are working with a higher timeframe, like the daily chart or the H4 charts, it takes about 32 to 144 hours for a trade to play out.
However, if you are trading with the H1, M15, or M5 chart, it will take around 40 minutes to 8 hours for one trade to play out. Hence, trading with a lower timeframe as a beginner will help you gain more experience in a shorter period of time.
Best Timeframe to Day-trade Boom and crash
Day traders make use of the H4, H1, 15-minute, and 5-minute timeframes in their technical analysis. They typically take the H4 timeframe as their higher timeframe and then do a top-down analysis to the lower timeframes. The 5-minute and 15-minute charts are used by day traders to spot entry points.
So, for day traders, the best timeframe to trade boom and crash are H4, H1, 15, and 5 minutes timeframe
Best Timeframe To Scalp Boom and Crash
Scalpers make use of the 15-minute, 5-minute, 2-minute, and 1-minute timeframes in their technical analysis. They start their top-down analysis with the 15-minute chart and then extend it to the lower timeframes. The 1-minute and 2-minute charts are used by scalpers to spot entry points in the market.
So, for scalpers, the best timeframes to trade boom and crash are 15-minute, 5-minute, 2-minute, and 1-minute timeframes.
Best Timeframe To Swing Trade Boom and Crash
Swing traders use the weekly, daily, 4-hour, and 1-hour charts in their technical analysis. They start with the weekly timeframe and then do a top-down analysis of the 4 hour or 1 hour chart.
So, for swing traders, the best timeframe to trade boom and crash are the weekly, daily, 4-hour, and 1-hour timeframes.
Conclusion
The best timeframe to trade boom and crash is solely dependent on the amount of time you have to spend on the market, how much experience you have, and how long you are willing to leave your fund on the market.
If you are a scalper, you will likely work with the 15-minute, 5-minute, and 2-minute timeframes, but if you are a day trader or swing trader, you will need to work with higher timeframes.