Charts and timeframes
What you learn in 3 minutesThe same USD/INR market shows a different picture on every timeframe you open. A move that looks like a trend on a five-minute chart can be a single quiet bar on a daily chart, and the money it represents changes with the timeframe you choose. This lesson shows how one price move reads on three timeframes, and why the timeframe decides what the rest of your plan has to be.
One move, three timeframes, three rupee figures
| Step | Amount | Note |
|---|---|---|
| Price at the start of the move | 83.2500 | The USD/INR level where the move begins. |
| Price at the end of the move | 83.2600 | The USD/INR level where the move ends. |
| Size of the move | 0.0100 | 83.2600 minus 83.2500. |
| Size of the move in pips | 100 pips | 0.0100 divided by 0.0001. |
| Value on one standard lot | ₹1,000 | 100 pips x ₹10 per pip on one standard lot of USD/INR. |
| Value on 0.10 lots | ₹100 | ₹1,000 x 0.10. |
| Value on 0.01 lots | ₹10 | ₹1,000 x 0.01. |
The broker may round the pip value, charge a spread on entry and exit, and quote a slightly different price from the one shown here. These charges 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 with the same lot size used on a daily plan. On the five-minute chart the same 100-pip move is one bar, but on the daily chart it is a small part of a much larger range. The lot size that fits a daily plan can be far too large for a five-minute plan, because the stop distance is much smaller. Before placing an order, decide which timeframe the plan belongs to, then set the lot size from the stop distance on that timeframe, not from the chart that looks most exciting.Check yourself
USD/INR moves from 83.2500 to 83.2550. How many pips is that, and what is it worth on 0.10 lots?
83.2550 minus 83.2500 is 0.0050. Divided by 0.0001 that is 50 pips. On one standard lot 50 pips is ₹500, so on 0.10 lots it is ₹50.
A reader trades 0.01 lots on USD/INR and the price moves 20 pips. What is the rupee figure?
20 pips on one standard lot is ₹200. On 0.01 lots that is ₹200 x 0.01 = ₹2.