1 minute and 5 minute charts appeal to so many traders because they can signal lots of short-term trades. Therefore they are ideally suited to traders who like to scalp the markets, but are they very profitable?
Well I’ve been trading Forex for a good few years now and despite coming up with numerous short-term strategies that initially appeared profitable, ultimately they have all failed. This is why I still predominantly trade off 4 hour charts, using the daily charts for guidance.
I haven’t once come across a consistently profitable system that uses 1 minute and/or 5 minute charts. I’m sure there are traders out there who are raking in lots of cash by taking multiple positions every day based on these charts, but I’ve yet to meet any of them.
What Are The Biggest Problems With 1 Minute And 5 Minute Forex Charts?
The major problem with them is that so much of the data from them is just noise, and you get so many false signals during the average day that it is very difficult to make any real money. Even the very best technical indicators are often rendered meaningless when used over such a short timescale, and even if correct signals are given the subsequent move may only turn out to be just 5-10 points.
Plus you’ve got the spread to contend with because you will often need 3 or 4 pips just to break even with a lot of forex brokers. Furthermore if you trade a lot of in-and-out positions, then it’s usually only a matter of time before your broker will be on to you because most forex brokers don’t like their customers making lots of very short-term trades.
I personally prefer my style of trading which involves 4 hour charts and generally will only consider adding a new system to my arsenal if it uses 30 minute or 1 hour charts and above. This way technical indicators are generally a lot more dependable, and therefore profitable.
If you know of a trading system that is consistently profitable using these charts, I’d love to hear from you.
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