An experienced trader told that when he had just started trading he always liked the biggest chart. Be when he became more experienced he started to prefer charts of a more modest size. Why? “Because the movement doesn’t seem as risky” is what he said.

Although funny, it raises the question, “is size really important?”.

After asking a bit more he explained it isn’t the size of the screen that matters but the time frame. Let’s see why.

The Newer Trader's Time Frame Error

Small time frames are often chosen by new traders. This seems logical. They say that is helps them ‘see’ the market. It also seems to be less risky. Against smaller swings you can place tighter stops.

This seems very logical, and it is to a certain degree. Risk can be easier controlled if the bar size is smaller. But the problem that can cancel the benefits is that it increases the noise level.

Reducing noise in market models is something that system developers do all the time. To filter noise they use derivatives of price. Because the using just the price can be noisy and cause costly whipsaws.

With a time frame that is too short the same can occur. Sometimes patterns on the chart look great while they aren’t. Once you trade it fails, it was just noise.

Why It Can Be Harmful

This is worse than frustrating for the newer trader. The new trader might never learn what a good set-up looks like when they only see small time-frames that look good. AN experienced trader told me that trading of one-minute charts is a lot like being a WWI soldier. Each time a soldier sticks his head out of the trenches he get picked off. Failure can occur if you trade in noise when it feels right.

One can learn valid setups by using a slightly higher time-frame because that can filter some (never all) noise.
The larger time-frame might not be used by traders because they want to be right (about the small time-frame) and because they fear loss. In order to avoid loss an shield the ego a smaller time-frame is used. But this can cause problems

What To Do

If your trade results are not what you want them to be try a larger time frame. Check whether this works in simulation trading.