Before entering Forex market you have to make couple of major decisions about the kind of trader you want to be and what are your objectives as a forex trader. Foreign exchange trades 24 hours a day during the working days. It is never closed except for weekends and one of the major decisions you will have to make is which time-frame suits you best.
What are your options? There are 1-minute, 5-minute, 15-minute, 1-hour, daily, weekly, monthly, or yearly charts and the kind of chart you choose will largely influence your trading results. The time frame you choose should fit your character and personality. It is not something you can skip and decide later on. This one should be on the top of your forex to-do list!
Which time frame is better depends on what you want as a trader and how prices act in the different timeframes. If you can't decide which time frame suits you best try both ways and see what works for you best.
For example, Trading with 5 minute charts will require couple of hours of your time. In that selected period of time you trade and once it is over, you stop. After that you can step away from your computer, take a shower and sing Scorpions' "Wind of Change". Then at some point of the day you come back to trade again. Your main goal is to stay focused during those few hours of active trading, place your orders, fix stops, adjust profit targets, and control your margins and so on. Unless you can spend the whole day plastered to your computer screen wearing your pajamas this is pretty good way of trading schedule.
The time frame you choose to trade forex depends on how much time will you be willing to spend trading and the time zone you live in, because you will have to be awake at the exact time when the trading markets are in their active state.
So basically you can be either day-trader or position-trader. The meaning of Forex day varies and it can happen anytime during 24 hours. If you live outside US and
As a day trader you would use 1, 5 or 15 minute charts. You will catch all the moves happening during your daily trading period of time and then exit all of your positions at the end of the day. This means that you never start your day with positions carried overnight from the previous day. You always start clean. It is quite stressful to watch the market and see the changes, but it is not as stressful as position trading.
What about position trader? How is he different from a day trader? Position trader uses larger scale frames and will not trade according to hourly charts. The time frames the position trader is interested in are weekly, monthly or even yearly charts. The positions are usually carried overnight from the previous trading day and the long-term trends are the ones that move the trader along.
Position trading sounds more risky since there might be significant daily price swings. It is relatively more stressful way to trade as well since you will always wonder about the positions you have left overnight. In my opinion, you have to be rich enough to afford this kind of trading. However, if your stops are set far enough from the daily price action you will surely see some profits.
So if you aren't that rich yet and scream occasionally at your dog go for smaller frames. Using middle frames (30 - minutes) you can easily watch the markets for a possible trade based on your trading tools. If you see something promising you can tune to hourly chart and see if you are trading any major trend. You can also check out 5-minut chart for a selected entry price.
So once again, the tip for the time frames is to know yourself in order to get into the trading environment that agrees with you.