Charts and timeframes
A timeframe is simply how much time each candle or bar covers. On a five-minute chart each candle is five minutes. On a one-hour chart each candle is one hour. On a daily chart each candle is one day. The price is the same; the picture is not.
The chart you open decides how many trades you take, how long you hold, and how much of your money goes to spreads and commissions. That is why the timeframe belongs in your plan before you place anything.
How the number of candles on your screen decides how often you pay
Each timeframe shows a different number of candles for the same price movement. On a five-minute chart, a full trading day holds 288 candles. On a one-hour chart, the same day holds 24 candles. On a daily chart, one candle covers the whole day. The price move is identical in all three cases, but the number of decisions you could make is not.
Every time you act on a candle, you pay a spread. If you trade once on the daily chart, you pay one spread. If you trade ten times on the five-minute chart, you pay ten spreads. The spread is charged per trade, not per pip of movement. So a shorter timeframe does not change the market; it changes how many times you pay to be in it.
Suppose the spread on EUR/USD is 1 pip. On one standard lot, that is ₦10,000 per trade. Ten trades cost ₦100,000 in spread alone. The same 60-pip move that gives ₦600,000 gross on one trade gives ₦600,000 gross on ten trades too, but the net is lower by ₦100,000. That difference comes from the timeframe you chose, not from the market.
What a longer timeframe hides and what it reveals about your holding time
A daily candle swallows all the small moves that a five-minute chart shows. On the daily chart, a day that ended 20 pips higher may have swung 80 pips in between. You do not see those swings, so you are less likely to react to them. That can be an advantage if your plan is to hold for days, because you are not tempted to close early on noise.
But the daily chart also hides the cost of waiting. If you hold a position overnight, your broker may charge a swap fee. That fee is not a spread and it is not a commission. It is a separate cost that depends on the broker and the currency pair. A longer timeframe means fewer spreads, but it can mean more swap charges. You need to check both.
The timeframe you pick must match how long you plan to hold. If you plan to hold for minutes, a daily chart will not show you the entry and exit points you need. If you plan to hold for days, a five-minute chart will show you too many entries, and each one costs a spread. The timeframe is not a preference; it is a statement of your holding period.
How to check that your entry, stop and target all come from the same chart
Once you choose a timeframe, every decision on that trade must come from it. If you enter on the five-minute chart, your stop and your target should also be based on the five-minute chart. If you enter on the daily chart, use the daily chart for your stop and target. Mixing timeframes means your exit does not match your entry.
A common error is to enter on a short timeframe because you see a quick move, then move your stop to a level from the daily chart when the trade goes against you. That turns a small loss into a large one, because the daily stop is much wider. The cost is not just the extra pips; it is the extra time you hold and the extra swap you may pay.
Before you place any trade, write down three things: the timeframe, the number of pips for your stop, and the number of pips for your target. All three must come from the same chart. If you cannot write them down, you are not ready to trade. This check costs nothing and takes one minute.
One 60-pip move on three timeframes
| Step | Amount | Note |
|---|---|---|
| The move itself | 60 pips | EUR/USD travels from about 1.0850 to about 1.0910, a rise of 0.0060, which is 60 pips |
| Cost of one pip on one standard lot | ₦10,000 | one standard lot is 100,000 units; 100,000 x 0.0001 = 10 units of the quote currency, converted at the current rate |
| Five-minute chart | ₦600,000 | 60 pips x ₦10,000 per pip on one standard lot; the move is spread over many candles |
| One-hour chart | ₦600,000 | the same 60 pips x ₦10,000; the same money, drawn with fewer candles |
| Daily chart | ₦600,000 | the same 60 pips x ₦10,000; here it may be a single candle |
The naira figure depends on the exchange rate used to convert the quote currency, and that rate varies between brokers. Spreads, commissions and swap charges also vary between brokers, and a broker may round the pip value. The three charts show the same move, so the gross figure is identical; what changes is how often a shorter timeframe invites you to trade and pay those costs again.
Doing it once, step by step
You will open one chart, mark the same price move on three timeframes, and calculate the spread cost for each. Then you will decide which timeframe fits your holding period.
- 01
Open EUR/USD and note the current price
Use your broker's platform or a free charting site. Find the price of EUR/USD, which is around 1.0850 in this example. Write it down. You will use this number on all three charts.
- 02
Switch to the five-minute chart and count the candles in one hour
One hour has 60 minutes. On a five-minute chart, that is 12 candles. Each candle covers five minutes. Note how many candles appear in a typical day: 288 if the market is open 24 hours.
- 03
Switch to the one-hour chart and count the candles in one day
One day has 24 hours. On a one-hour chart, that is 24 candles. Each candle covers one hour. The same price move now looks smoother because each candle hides the minutes inside it.
- 04
Switch to the daily chart and count the candles in one week
One week has five trading days. On a daily chart, that is five candles. Each candle covers one full day. The price move that looked wild on the five-minute chart may now look like a single small step.
- 05
Calculate the spread cost for one trade on each timeframe
Assume the spread is 1 pip. On one standard lot, that is ₦10,000 per trade. If you take one trade on the daily chart, you pay ₦10,000. If you take ten trades on the five-minute chart, you pay ₦100,000. The market did not change; your timeframe did.
- 06
Write your holding period and pick the matching timeframe
Decide how long you plan to hold: minutes, hours, or days. If minutes, use a short timeframe. If days, use a daily chart. Then write your stop and target in pips using only that chart. Do not mix timeframes.
The mistake most people make here
The common mistake is to open a five-minute chart, see a sharp move, and take it as a signal, then hold it for days. The five-minute view is built for short holds; the daily view is built for long ones. Mixing them means your exit does not match your entry, and each extra trade adds a spread you pay whether you are right or wrong. Decide the timeframe first, then let the entry, the stop and the target all come from that same timeframe. If you cannot say how long you plan to hold, you are not ready to place the trade.Check yourself
EUR/USD moves 25 pips. On one standard lot, what is that in naira at the rate used here?
25 pips x ₦10,000 per pip = ₦250,000. The pip value assumes the conversion rate given in the example; your broker's rate may differ.
You take three trades of 20 pips each on one standard lot in a day. What is the gross figure, and why is the net figure lower?
3 x 20 pips = 60 pips. 60 x ₦10,000 = ₦600,000 gross. The net is lower because each of the three trades pays a spread, and possibly a commission, so costs are charged three times.
The same 60-pip move appears on a five-minute chart and a daily chart. Does the naira value of the move change?
No. The move is 60 pips on both, so on one standard lot it is 60 x ₦10,000 = ₦600,000 on both. Only the number of candles and the number of trading decisions change.
Questions that come up next
Which timeframe should a beginner in Nigeria use first?
There is no single correct timeframe. The right one is the one that matches how long you plan to hold the trade. If you cannot say how long you will hold, the timeframe cannot be chosen. Start by writing your holding period in hours or days, then pick the chart that shows that period clearly. A five-minute chart suits holds of minutes; a daily chart suits holds of days.
Does a shorter timeframe cost more in naira even when the price move is the same?
Yes, if you trade more often. Each trade pays a spread, and the spread is charged per trade, not per pip. On one standard lot, a 1-pip spread is ₦10,000. Ten trades on a five-minute chart cost ₦100,000 in spread alone, while one trade on a daily chart costs ₦10,000. The market move is identical; only the number of payments changes.
What is the difference between a spread and a swap charge?
A spread is paid every time you open a trade, and it is charged once per trade. A swap is a fee your broker may charge for holding a position overnight, and it is separate from the spread. A longer timeframe means fewer spreads but can mean more swap charges. Both costs vary between brokers, so check your broker's terms before you hold overnight.
Can I use two timeframes at once, such as daily for direction and five-minute for entry?
You can look at more than one chart, but the entry, stop and target for a single trade must come from the same timeframe. If you enter on a five-minute chart and set your exit from a daily chart, your holding time does not match your entry. That mismatch is the common mistake this lesson warns about. Pick one timeframe per trade and keep every decision on it.
How many candles does one trading day contain on each timeframe?
On a five-minute chart, a full trading day holds 288 candles. On a one-hour chart, the same day holds 24 candles. On a daily chart, one candle covers the whole day. The price is the same in all three cases, but the number of decisions you could make is not. More candles mean more chances to act, and each action costs a spread.
Does the naira value of a 60-pip move change between timeframes?
No. A 60-pip move is 60 pips on every chart, so on one standard lot it is 60 x ₦10,000 = ₦600,000 gross on each. What changes is how many trades you take to capture it and how many spreads you pay. The conversion rate used here is an example; your broker's rate may differ, and pip values may be rounded.
The words used on this page
- Timeframe
- The amount of time each candle or bar on a chart covers. A five-minute chart has one candle per five minutes; a daily chart has one candle per day. The price is the same, but the picture and the number of decisions differ.
- Spread
- The gap between the price at which you can buy and the price at which you can sell. It is charged every time you open a trade, not per pip of movement. On one standard lot, a 1-pip spread on EUR/USD is ₦10,000 at the rate used here.
- Swap
- A fee a broker may charge for holding a position overnight. It is separate from the spread and from commission. The amount depends on the broker and the currency pair, so it varies. A longer timeframe can mean more swap charges.
- Standard lot
- A fixed trade size used in the examples on this page. One standard lot on EUR/USD gives a pip value of about ₦10,000 at the conversion rate used here. Your broker's rate and rounding may differ, so the naira figure can vary.
- Holding period
- How long you plan to keep a trade open, from entry to exit. It decides which timeframe fits. A hold of minutes needs a short chart; a hold of days needs a daily chart. If you cannot state it, you are not ready to place the trade.
- Candle
- One bar on a chart that shows the open, high, low and close for its timeframe. A daily candle covers one whole day, including moves a five-minute chart would show separately. The number of candles on screen changes with the timeframe, not the price.
What to take away
- The timeframe you open decides how many trades you take and how many spreads you pay, not the size of the price move.
- One 60-pip move on EUR/USD is ₦600,000 gross on one standard lot on any timeframe; the net falls as you trade more.
- A spread is charged per trade, a swap is charged for holding overnight, and both vary between brokers.
- Entry, stop and target must all come from the same timeframe as your planned holding period.