When it comes to day trading, the extreme is scalping - trading minutes. And to that matter, we will go to the 1-minute BTC chart, which provides the most recent data when it comes to the candles!
The Advantages Of 1 Minute Charts
1-minute charts can be your best friend when your objective is to execute fast intraday trades. Due to its very nature, it will provide nothing but the most recent information regarding pricing, and you need to be able to identify chart and Price Action patterns that are relevant to such timeframes.
Another secret advantage is that 1-minute charts let you visualize a huge spectrum of price swings when zoomed out, which you can use for longer-term trades as well.
Scalping With The 1 Minute Chart
Let’s delve into the most obvious function of this timeframe: scalping.
Scalping requires you to be able to perform technical analysis quickly and in minutes. That is not suitable on timeframes higher than the 5-minute chart, so the 1-minute chart is normally the first choice for scalpers.
Let’s have a look at this:
That’s a textbook head and shoulders pattern. Now, notice the date and compare that chart with this 5-minute one. As you can see, the head and shoulders pattern wasn't here - so we wouldn't see this opportunity on the 5m chart. But still, on the 5m chart, it would be possible to trade the red Inside Bar pattern.
Or another great approach is to analyze higher time-frames (like 5m and above) and go in the direction of that time-frame, but open and time trade entries for example based on the 1m chart.
This is called MTF - multi-timeframe analysis - and it's a very successful approach to trading that is applied by many professionals in the trading world.
You can read more about how that works in one of our Forex articles here.
Now that we’ve established that the 1-minute chart is the best timeframe for full-on scalping, how could you have traded that one opportunity?
Extra: 1 Minute Chart For Longer Trades
A “hidden” way you can make use of the 1-minute chart is by zooming out as much as you can and identify trends with much more information been available to you.
Look at this view of a full trading day on a 30-minute chart:
Fairly standard, right? Now, behold the same day on the 1-minute chart!
A myriad’s worth of data more compared to the other 30-minute simpler chart!
Sure enough, this means that you need to process much more, so it may be less intuitive, but an experienced trader can get much more from the second chart than from the first one!
You can see how the downtrend shown at the beginning of the day looks a lot different on the two charts.
On the first chart, you can see how many times the trend reversed, which is a great indicator for determining when you should exit the trade.
On the other hand, the second chart also shows the same trend, but it lacks the information that you could’ve used to predict the ending point of the trend.
So, with all that said, I wish you much success and a lot of profits in your trading adventures!
Take care and trade well!
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