Beginner Time frame questions

[target_300k]

Took a break from my Forex trading education to go fishing in Cornwall. However, I haven't made my self impose deadline for writing a trading plan by 31/07/2010:-(

Anyway, my question today is about Timeframes. i have decided to scalp and be a day trader since I am totally committed to learning to trade. A lot can happen within a few seconds in the market, I like to hear your suggestions for

a. Timeframe to determine overall trend - I am currently thinking 10mins chart
b. Timeframe for staying in trade - I am thinking 5mins - is this too cautious?

So, essentially i watch the markets for 10 mins to determine which way it's trending then enter for five minutes or not at all. Can anyone please offer suggestions. Thanks.

 

[jiggly]

Took a break from my Forex trading education to go fishing in Cornwall. However, I haven't made my self impose deadline for writing a trading plan by 31/07/2010:-(

Anyway, my question today is about Timeframes. i have decided to scalp and be a day trader since I am totally committed to learning to trade. A lot can happen within a few seconds in the market, I like to hear your suggestions for

This is not reason enough to favor a particular 'style' of trading over another, you should introspect on this and look at your strengths and weaknesses as a trader and also what 'style' is best suited to your personality. if you must make money ever day, when you trade, then you have little choice.

a. Timeframe to determine overall trend - I am currently thinking 10mins chart
b. Timeframe for staying in trade - I am thinking 5mins - is this too cautious?

its very quick, if you want to trade off the 5 minute chart, then I would suggest your other two time frames be of 4 x magnitude higher than the other. so in this case it would have to be, 5mins, 15mins, 1H......(as there is seldom a 20mins chart)

So, essentially i watch the markets for 10 mins to determine which way it's trending then enter for five minutes or not at all. Can anyone please offer suggestions. Thanks.

no mention of exit strategy, no mention of money or risk management criteria, these are far, far more important than a simple entry trigger.

my suggestions in bold

 

[target_300k]

Thanks Jiggly...I am comfortable to risk b/w 5%-10% (micro account)of my account on each trade, so would place stop losses accordingly. I am a little bit uncertain when taking profits. maybe just 5-10pips limit for 5 minute trades. But I'll hate to exit too early. I think I need more testing and demo trading time before I can truly understand when and how to take profits based on my own edge.

 

[SanMiguel]

Thanks Jiggly...I am comfortable to risk b/w 5%-10% (micro account)of my account on each trade, so would place stop losses accordingly. I am a little bit uncertain when taking profits. maybe just 5-10pips limit for 5 minute trades. But I'll hate to exit too early. I think I need more testing and demo trading time before I can truly understand when and how to take profits based on my own edge.

5-10% trading for 5-10pips profit presumably with 5-10pips SL will see you account gone in...ooh...less than a month probably.

 

[target_300k]

SanMiguel since I am currently operating a micro account, a 5-10% risk is fine. But I do take your point of balancing that with profit expectations. On a 5 mins chart (for) (ex)ample, how do you estimate the number of pip movement expected? If I calculate the distance(in pips) to a support/resistant/fib retracement level for example. What amount pips would you say I should be taking for 5-10% risk? Thanks.

PS. I would appreciate some ruthless/honest suggestions, if you can already smell disaster.

 

[SanMiguel]

SanMiguel since I am currently operating a micro account, a 5-10% risk is fine. But I do take your point of balancing that with profit expectations. On a 5 mins chart (for) (ex)ample, how do you estimate the number of pip movement expected? If I calculate the distance(in pips) to a support/resistant/fib retracement level for example. What amount pips would you say I should be taking for 5-10% risk? Thanks.

PS. I would appreciate some ruthless/honest suggestions, if you can already smell disaster.

I think you have to consider your pip spread as well. If you're paying 4 pips in spread, then you have to make that extra every trade and that adds up over the long run.
I would be looking to a minimum of 20pip trades probably more.
Pick a pair and study it across Daily, 4hr, 1hr, 10/15mins so you can see the whole picture.

 

[SanMiguel]

SanMiguel since I am currently operating a micro account, a 5-10% risk is fine. But I do take your point of balancing that with profit expectations. On a 5 mins chart (for) (ex)ample, how do you estimate the number of pip movement expected? If I calculate the distance(in pips) to a support/resistant/fib retracement level for example. What amount pips would you say I should be taking for 5-10% risk? Thanks.

PS. I would appreciate some ruthless/honest suggestions, if you can already smell disaster.

Let me show you a statistics example from an old book I dusted off:

Let’s assume for the purpose of this example that we are trading a currency
pair that has a 3-pip spread, since a spread of that size is very common
in the forex market.
Our trader just wants to gain 10 pips. That should be easy, right? It’s
understood that the trader will lose the spread (3 pips) upon entering the
trade. So, in order to turn a profit of 10 pips, the trader actually needs the
exchange rate to move 13 pips in his or her favor:
10 + 3 = 13
Now that we know what is required to create a winning trade, let’s see
what would have to happen to create an equivalent loss. This is how we
will determine the odds of success or failure.
In order to generate a loss of 10 pips, the trader would only need an
adverse move of 7 pips. This is because a loss of 3 pips is incurred immediately
upon entering the trade, again due to the 3-pip spread.
10 − 3 = 7
We’ve determined that our trader needs a positive move of 13 pips to
gain 10 pips, but an adverse move of just 7 pips will result in an equivalent
loss of 10 pips. The “raw odds” of 10-pip win versus a 10-pip loss for this
trade can be expressed as:
13/7 = 1.857 : 1
The odds of success in this case are 1.857:1, or nearly 2:1 against.

Obviously the system makes a difference but it's no surprise to me to see a 2:1 mentioned here as that is also close to the RR you should strive for on every trade.

 

[Verbierdave]

With this you also need to be watching what is going on with the news too, there could be something that is going to affect a currency you are trading that will make it go way more than just your few pips your looking for on average, do you really want to miss out on that???

 

[rathcoole_exile]

watching news is meaningless bollox,
completely useless for what this guy hopes to do

News impact trading on 5/10 mins TF as he expressed ?

are you kidding ????????????

 

[Verbierdave]

I understand what he was wanting to do but it's also helpful for him to take into consideration other factors such as Employment Labor statistics being released etc. By this all I'm meaning is that if yes he makes his pips as he wants to then taking news such as this into consideration and positioning himself correctly for it, be it long or short, then he could take advantage of possibly making more pips on the occasions they do come out. I understand this won't be effected every 5 or ten min TF that he is on about but also if they do come out and you are ignoring them you could lose a lot dependent on your lot size in just a few seconds. I know because although my lot sizes may not be massive I've been on the upside and down side of this in the past.
All I was doing is giving him something else to think about, other effecting factors.
I don't really think it needed a response of meaningless B****x either even if you don't think it's worth reading.

 

[bob_the_trader]

Agree with Verbiedave and am sure he didnt mean watch the 6pm news, but watch business channel or CNBC etc. Jobless reports, CPI etc all cause currencies moves of huge amounts and I hedge such announcements all the time. Movemnts of 50 points or more in 5 10 mins is very commonplace. I watched AUD slide (am based in Oz) 60 pips over the CPI and China trade figures last week

"Meaningless bollox" as a reply to someone trying to help is just unhelpful and stupid.

 

[Black Swan]

Anyway, my question today is about Timeframes. i have decided to scalp and be a day trader since I am totally committed to learning to trade. A lot can happen within a few seconds in the market.

IMO you should start trading one pair (EUR/USD) of a 1 hr TF. You will never be a scalper working from home on a BT broadband style connection with a 2-3 pip spread from the usual retail brokers, most folk on here have no idea what a scalper actually is, it's now evolved into an assumption that scalpers are retail players trading off 1-5 min TFs...

IMO if you determined to trade off 5 min TFs you'd get better results off a 15 min TF, mightn't be in at the 'b of the bang' of every move but you'll get a better ROI and your time, you'll give less back to the market; have less whips, fakes, slips, stops being hit and ergo your frustration levels will be less tested..

 

[Pi3141]

IMO you should start trading one pair (EUR/USD) of a 1 hr TF. You will never be a scalper working from home on a BT broadband style connection with a 2-3 pip spread from the usual retail brokers, most folk on here have no idea what a scalper actually is, it's now evolved into an assumption that scalpers are retail players trading off 1-5 min TFs...

IMO if you determined to trade off 5 min TFs you'd get better results off a 15 min TF, mightn't be in at the 'b of the bang' of every move but you'll get a better ROI and your time, you'll give less back to the market; have less whips, fakes, slips, stops being hit and ergo your frustration levels will be less tested..

May I ask roughly how big the stop loss size would be for trading off a 15min TF?

Thanks,

Pi

 

[Black Swan]

May I ask roughly how big the stop loss size would be for trading off a 15min TF?

Thanks,

Pi

I'd choose the HH or LL of the current session. In my experience that generally averages out that a 50 pip stop more than covers it, you can then (if you wish) adjust to meet the precise HH/LL once you've pulled the trigger. iirc I found that the stop was breached at approx. 27-30, but placing the stop at that average would be too low imho.

 

[Pi3141]

Thanks

 

[liontrades]

You want to choose a set timeframe to take your entries and exits on. Then I recommend you to use a moving average to give you the trend of higher timeframes rather than having to keep switching timeframes. It depends on your strategy but a 150 exponential moving average applied to close is a common trend to trade with. It really depends on your style. The moving average and timeframe itself are not important. The importance is that you just choose one and then stick to it and do not deviate from your rules. This is why most traders fail. They merely do not stick to rules.

 

[t2wfx]

You want to choose a set timeframe to take your entries and exits on. Then I recommend you to use a moving average to give you the trend of higher timeframes rather than having to keep switching timeframes. It depends on your strategy but a 150 exponential moving average applied to close is a common trend to trade with. It really depends on your style. The moving average and timeframe itself are not important. The importance is that you just choose one and then stick to it and do not deviate from your rules. This is why most traders fail. They merely do not stick to rules.

"Stick to the rules". Simple advice but most neglect it and fail miserably...

 

[liontrades]

Exactly!

 

[forexdiscussion]

Hi,

It depends on your profit or pips target. My style of trading is

1. Determine your daily chart support and resistance.
2. Enter market confirm by the price action at 4H and 1H.

Smaller time frame consist a lot of noise and to trade against a trend of bigger time frame is really unwise.

It's simple and doesn't need to be a space shuttle science to make profit!!!