Unit 3 · Level 1 · Charts & Candles
Timeframes: zooming in and out
A '1-hour chart' means each candle summarizes one hour of trading. A daily chart: one candle per day. Same market, different zoom. A crash on the 5-minute chart can be an invisible blip on the weekly.
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What you get asked
On a daily chart, how much trading does one candle represent?
That single daily candle contains thousands of trades compressed into open, high, low, close.
BTC looks like it's crashing on the 5-minute chart but rising smoothly on the weekly. Which is 'true'?
Neither lies. The question is which one matches YOUR trade: a day trader lives on minutes; a long-term investor thinks in weeks.
Short timeframes have more ___, the random-looking movement that means little.
The shorter the timeframe, the more noise per signal. Beginners on 1-minute charts are basically watching static and calling it patterns.
A sensible way to analyze any asset: order the zooms
Top-down analysis: big picture first, details last. The reverse, deciding from a 1-minute chart, is how beginners get chopped up.
True or false: professional traders all use the same timeframe.
A scalper and a pension fund are both 'right' on different charts. Your timeframe should match your patience, your schedule, and your plan.
The rest of this unit
Read candlesticks, timeframes, trends and volume: the language of every chart.