Charts and timeframes
What you learn in 3 minutesThe same EUR/USD price can look like three different markets depending on the timeframe you open. On a five-minute chart a move may look like a strong trend, on an hourly chart it may be a small pullback, and on a daily chart it may be almost invisible. This lesson shows how the timeframe you choose changes what you see, and why that choice decides the rest of your plan, including how many pips you are aiming for and what that is worth in pesos.
One 30-pip move on three timeframes
| Step | Amount | Note |
|---|---|---|
| Five-minute chart (M5) | 30 pips | The move takes about 30 minutes and fills most of the screen, so it looks like a clear trend. |
| One-hour chart (H1) | 30 pips | The same move is one candle among many, so it looks like a small step inside a wider range. |
| Daily chart (D1) | 30 pips | The same move is a tiny part of one daily candle, so it looks like noise. |
| Value of 30 pips on one standard lot | ₱17,100 | One pip on one standard lot of EUR/USD is 10 units of the quote currency (100,000 x 0.0001). At an example rate of ₱57 to 1 unit, 30 pips x 10 x ₱57 = ₱17,100. |
The broker may round the conversion rate, charge a spread or commission, and quote a slightly different exchange rate, so the final peso amount can vary between brokers.
The mistake people make here
The common mistake is to open a five-minute chart, see a strong move, and trade it without checking the hourly or daily chart. That move may be only a small pullback on the higher timeframe, so the trade can be stopped out by the wider swing. Before placing any order, look at the same instrument on at least two timeframes and decide which one your plan is based on. If the higher timeframe disagrees with the lower one, wait or reduce your size.Check yourself
On a five-minute chart you see a 20-pip move. On the daily chart the same move is barely visible. If you trade 0.10 lots of EUR/USD and the move is 20 pips, what is the value in pesos at an example rate of ₱57 to 1 unit?
One pip on one standard lot is 10 units of the quote currency. On 0.10 lots, one pip is 1 unit. So 20 pips x 1 unit = 20 units. At ₱57 per unit, 20 x ₱57 = ₱1,140. The broker may round the rate and add costs, so the final amount can differ.
You see a 40-pip move on the hourly chart and a 40-pip move on the daily chart. Are they the same opportunity?
No. The number of pips is the same, but the time taken and the context are different. On the hourly chart 40 pips may be a full swing; on the daily chart it may be a small part of one candle. The timeframe decides whether your target and stop are realistic.