The above question is one I am often asked and it is so fundamental to the success of your trading that I thought I would spend a few minutes this morning just explaining how and why it is so important.

Firstly, I am assuming that you are a chartist, like me, in other words you believe that virtually all the trading information you require is contained in the candlestick charts. Your trading decisions are based on the interpretation of the candle formations, combined with other simple technical indicators, such as moving averages and volume. When you first start trading you flick endlessely between various timescales from 1 minute charts through to 1 month, hoping that what you see in one, will be confirmed by another. Ofcourse this is never the case, and you are mesmorised into inactiivity by the sheer voulme of data in front of you, and the conflicting signals they are giving. At this point you must stop, and go back to your trading plan ( which you probably don’t have ! ) and decide what type of trader you are planning to be - yes it’s called planning - we plan other parts of our lives and businesses, but never seem to have a plan for trading. ( it’s so boring - yes but essential)

Let me give you a simple example which I hope will demonstrate the point. Suppose you have decided after much practice that you propose to be a short term scalping trader, taking a few pips on every trade, and probably entering many trades a day. Would you look at the monthly, or weekly chart - no ofcourse not - you may not even look at the daily chart. You would probably work on a combination of 5 minute, 15 minute and 1 hours charts ( or somehting similiar ) with the daily chart in the back of your mind. OK, suppose we see a bullish engulfing candle in the 5 minute chart ( positive prices in one timeframe have engulfed negative prices on the previous candle ) we would consider this a positive sign to open a buy trade, which could be open for the next 5, 10 15 minutes, maybe even longer. If our trader looked at the longer term charts they may well be saying something different ( for the longer term) - but our trader is not a long term trader, and is only interested in the next few minutes of price movement - not the next few hours, weeks or days!

If we now look at my trading style, I am a long term trader. I have no interest in the 1, 5 minute, 15 minute or any other short term chart. All my trading decisions are based on the hourly, daily ( mostly ) weekly and monthly charts - hopefully I have made the point.

It is crucial that you decide what type of trader you are before you start, and which chart timeframes you are going to use - otherwise you will be overwhelmed with information and end up flitting between charts looking for confirming signals - please don’t - decide on a trading style, write it in your plan and stick to it!! If you would like to ask me a question on the above please feel free to email me from my site at and I will be happy to answer your questions.