How small can a position be in the forex Trading Strategy market? In this article we want to tell you that it can be as little as only one minute. This is where the idea of one minute trading comes into play in the foreign exchange market.
If you employ the right strategies and analysis tools, not only is it possible to trade in the forex market in one-minute frames, but you will also be able to do it sustainably and maintain a reasonable level of profitability.
So stick around in this article to find out all about the small time frames in the forex market and their corresponding trading strategies and trading techniques that can be useful for them.
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What Is the Role of the Time Frame in Forex Trading?
When it comes to the profitability of your trades in the forex market, one important factor among many others is the time frame of your positions in the market. The time frame of the position is basically the duration of time that the particular position remains open.
There are a lot of considerations as to how long a position ought to remain open. Because there can be a situation when you close the position too early which would mean the loss of potential profits. Or it can be the other way around, where you would unfortunately close the position too late which would lead to the loss of accrued profits.
So closing a position is just as important as opening it. Of course the considerations that are taken into account for opening a position in the forex market are known as entry point analysis and calculation. Similarly we have analysis and calculation for exiting a position or finding the right exit point.
But the duration or time frame of any position in the forex market is totally dependent on the type of trading strategy that you employ. This is because it is through the trading strategy that you are able to benefit from different time frames.
For example, there are certain trading styles and trading strategies that simply demand that you opt for a much longer time frame. One particular strategy is known as the swing trading style. In this style of trading positions have remained open for a very long time. The usual time frame in swing trading can be weeks. So in such trading strategies, the trader needs to ignore the small fluctuations that might occur in their profitability of the position. Because in the long run, small fluctuations become of little importance.
But just as there are larger time frames, there are smaller time frames which are actually quite popular in forex. In the next section we are going to focus on these small time frames.
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What Are Some Small Time Frames in Forex?
So what are the small time frames in forex and why are they popular? There is a reason why we decided to focus on a one minute time frame in forex. This is because 1 minute time frames are an actuality in this market. And the reason small time frames are so popular is due to the unique nature of forex itself.
You see the forex market may not exhibit vast and huge fluctuations such as the ones we see in the stock market or the crypto market, most of which are baseless and even fraudulent market maneuvers.
In forex, however, because the main financial instruments for trading are foreign currencies, we do not see large and sudden changes. So a smart forex trader must be able to capitalize on even the smallest movements.
This is where we have trading strategies such as day trading or scalping.
In these strategies, the forex trader will only keep the position for a short period of time. For instance, in day trading, positions are opened and closed necessarily within the same trading day, as the name of the strategy indicates as well.
But it can be much smaller. As small as only one minute. In the strategy of scalping, positions in the forex market are kept open for such a short period of time before they are closed. This duration can be only seconds. So with this strategy, traders can open and close positions in under a minute. And this is who we have one minute time frames in forex trading.
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Which Techniques and Indicators Are Most Suitable for One Minute Trading?
Given the nature of one minute trading as seen in the scalping strategy, you must be very precise and accurate in your market analysis in order to be successful in trading with this approach.
One way you can increase your odds of success with scalping is to use the following technical indicators: moving averages and relative strength index.
- Moving averages can be extremely useful in scalp trading because they can help you determine the market movements and trend changes in the short term. You can take advantage of this knowledge and capitalize on these small movements.
- Relative strength index or RSI is another particularly useful indicator when it comes to scalp trading. With the help of RSI you can calculate and predict the speed of change in prices. In this way you will not be taken out of the blue because of a price change that occurs too quickly.
With the help of these tools and indicators and many other techniques that are available you can improve your skills of trading the one minute time frame in the foreign exchange venue.
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Conclusion
Small time frames are quite popular in the forex market. This is because there are a whole lot of small variations that take place in this market. As a result, these small time frames will help you capitalize on them. Perhaps the smallest time frame is of course the one minute time frame. The one minute time frame can be seen in the trading strategy known as scalping. In this article we focused on the role of time frames in forex trading and we also discussed relevant techniques and strategies.
