The significance of a variety of time periods
The value of using numerous time frames and paying attention to longer time frames cannot be overstated. While you may not be trading on the weekly chart, knowing how to read the weekly trend may keep you on the right side of the market. Too many individuals would say things like this regarding a currency pair: “We are in a weekly downturn, but the daily rise is bumpy.” The four-hour chart is flat after that, but the hourly chart is rising.“ The most essential line in that statement, at the end of the day, is ”We are in a weekly downturn. All of the other changes are meaningless in the long run unless they follow the trend.
One of the most important things that people don't realize is that purchasing or selling a currency or commodity is just like buying or selling anything else. For example, unless you really had to, you would not go to the store and start buying a television that was marked down 15% or less. If, on the other hand, there is a sale on and the same television is 10% off, you could be enticed to participate since it symbolizes value. Many traders are unaware that they are just taking part in price discovery and, in essence, an option process. Futures dealers are aware of this, but Forex traders are not.
The essential point to remember
The essential takeaway is to just follow the longer-term traders' lead. They are the market's bigger money players, and they decide where it will go in the long run. You can now look at the charts in this example with a bullish mindset and just seek for pullbacks that line up with small bits and pieces of support on the longer-term charts. This is the simplest and most effective method of trading markets.
Remember, whatever item you wish to acquire, you should constantly be seeking for value. It was the US dollar in this situation. It doesn't really matter; we could use the television as an example, regardless of whether it's on sale or has increased in price. Over time, the procedure is exactly the same. The simplest method to achieve this is to ensure that the timeframe you pick to trade on corresponds to the longer-term trend. I use the weekly chart to define the longer-term trend for myself.
