Today, I'm going to discuss a little more of the esoteric details on the candlestick charts, particularly one detail I have not mentioned yet at all: time frames.
Here's a few of our favorite candlestick charts for Bitcoin.
All three above charts show Bitcoin in three different time frames, but it shows information in different ways. Until now, this is what we've been using to represent each asset we examine. now we need to move to a more in-depth system it actually shows us greater detail.
Without further adieu, here is a chart that shows a wider range of time frames for Bitcoin.
Now we begin to see that we have a lot more abilities and capabilities to analyze Bitcoin. Not every time frame is always profitable, so often times traders will use different time frames to try to get the profits they can.
Depending upon who you ask, we're going to get different answers on this next question, which time frame is the most profitable?
The short answer is all and none.
Now for the explanation, the one minute time frame is a very narrow time frame and as such the profits that you can expect to receive are also narrow. Many people consider the 1 minute and 5 minutes time frames to be scalping.
Scalping is a term as referred to taking profits as small levels, but making excessive amounts of trades to benefit from those profits. in order to be successful at scalping you need to make a large number of successful trades, hundreds a day. The only way to really do this is automated trading.
The higher time frames allowed for you to wait and take higher profits. They also allow for better analysis of upwards and downwards trends. You can still benefit from automated trading, but you can also manually trade at the higher time frames.
Here is a 1-minute candlestick chart and a 4-Hour candlestick chart.
All five of the charts on this page say exactly the same information. How we use this information is what is important. And you can see, the 4-hour candlestick chart shows that Bitcoin is decreasing in price, a downward trend. this is very important if you want to get into Bitcoin and you want the lowest price.
However, using the second chart on this page, the 30-minute chart that shows multiple days, we can see that Bitcoin had a short-term increase come up but now it looks like it's fairly stable and consistent, or what is often referred to as a sideways market.
Don't be afraid to explore the different time frames that exist as often times you may get better profits just by switching your time frame.
The most important differences between a time frames is this, the smaller the time frame the more bullish it is, whereas the longer the time frame the more bearish it is. Longer time frames also make it easier to find trends.
Trends are an important aspect in any kind of stock or crypto market. If you ride the trend up and sell at the top, you will make a very nice profit. If you ride the trend to the bottom and buy a given asset, it gives you a better chance of a good profit. Trends often work in cycles and discovering that cycle can help you make your best profits, but getting in at the wrong time can give you some of your worst losses.
In conclusion, the candlestick charts are an important and invaluable tool. When you combine different time frames as part of your research and analysis, you can get a better understanding of just where an asset is going and whether or not it will be a good purchase. Always do your due diligence in research any asset you want to purchase. I cannot underscore the importance of these tools and their availability.