In today forex faq, we have a question from one of our fellow traders.
Below is the question:
Hi, what is the best time frame to scalp trade, the 1m or 5m frame, and how long should you stay in that trade if it is not going your way please.
Scalping is one of the most popular strategy among new traders as most traders do not want to stay in a trade for too long.
Most of the time, scalping is done on the lower time frame like the 1 minute or 5 minutes chart. However I personally prefer the 5 minutes time frame as the 1 minute time frame produces too much false alarm.
No doubt the 1 minute time frame will produce more trading opportunity, but the 1 minute time frame also produces a lot of false alarm trades which will lead you to losses. This is simply my own personal opinion.
Therefore I will suggest that you trade off the 5 minutes chart instead of the 1 minute chart.
As for how long you should stay in the trade if it is not going your way. I will suggest that you exit the trade based on stop loss and not based on duration.
As for where to set the stop loss, it depends on the strategy you are using. Some traders set their stop loss several pips away from level of strong support and resistance while some traders set their stop loss based on a fixed number of pips.
I will suggest that you learn how to identify level of strong support and resistance and then place your stop loss several pips away from these levels.
Personally I do not exit a trade based on duration. I dun mind letting the trade run as long as it did not hit my stop loss or target profit. The reason why I do not encourage you to exit a trade based on duration is because you will run into the problem of losing a lot of money when the market makes a sudden movement against you.
The best protection for a traders account is the stop loss. Therefore I will suggest that you decide how you want to set your stop loss and always remember to set it once you enter a trade.
I hope that I have answered your question and do feel free to contact me whenever you have any questions regarding forex trading.