Best time frame for the inexperienced?

[leonarda]

I am sure there will be lots of differing opinions on this, but from my experience and from books I have read, trading the medium-term timeframes (1-2 months) is a far easier and safer route than other shorter timeframes. Some reasoning being with shorter timeframes stops need to be tighter and volatility makes life more difficult. Some book/web opinions that agree with this:
- Stan Weinstein's "Secrets for Profit in Bull and Bear Markets":
"Buying on Monday and selling on Tuesday is smart only if you want to make your broker rich"
- Robbie - The Naked Trader:
again, day trading is is fine if you want to make your broker rich...
- financial-spread-betting.com, SB company quote:
"some of our most successful clients hold for 6-8 weeks..."

Note: I'm not saying you can't be successful at short term trading, of course you can. It just seems for the novice/inexperienced trader (note not Investor), longer term is easier. However, I do think the psychological requirements and need to be in a trade
cause alot of us newbies to pick the shorter time frame.

 

[robster970]

I found that trying to day trade for a while really sharpened up my trading. I've settled back to H4 now and take the odd shot intraday when it's a no-brainer. I put this down to:

1) Significant increase in screen time massively improved my exposure to PA

2) Churning the account with regular trades made me 'feel the burn' when I did stupid things which then positively reinforced my learning.

3) Helped me to improve filtering noise, improved my discipline and decision making.

Now on H4, everything is the same but a bit slower, more sedate and more considered.

I would recommend everybody have a go at it to sharpen up - it really amplifies your problem areas therefore forcing you to confront them.

 

[spy74]

I am sure there will be lots of differing opinions on this, but from my experience and from books I have read, trading the medium-term timeframes (1-2 months) is a far easier and safer route than other shorter timeframes. Some reasoning being with shorter timeframes stops need to be tighter and volatility makes life more difficult. Some book/web opinions that agree with this:
- Stan Weinstein's "Secrets for Profit in Bull and Bear Markets":
"Buying on Monday and selling on Tuesday is smart only if you want to make your broker rich"
- Robbie - The Naked Trader:
again, day trading is is fine if you want to make your broker rich...
- financial-spread-betting.com, SB company quote:
"some of our most successful clients hold for 6-8 weeks..."

Note: I'm not saying you can't be successful at short term trading, of course you can. It just seems for the novice/inexperienced trader (note not Investor), longer term is easier. However, I do think the psychological requirements and need to be in a trade
cause alot of us newbies to pick the shorter time frame.

i think your time-frame depends more on your lifestyle, particularly how much time you can devote to watching the markets and placing trades, and also how engaged in the markets you want to be. Assuming you have a full time job, you could look at the weeklies and dailies in the instruments you choose and only have to spend an hour or two at night watching your charts and doing some analysis - i used these when I started out, and found it great because i only placed a trade once, maybe twice a week but i was watching the market each day for a potential set-up, which was enough to keep it interesting and keep me engaged in the markets - any longer and I'd have found it a bit boring. In regards to your stops, I think these are a function of your set-ups i.e you should place a stop where your set-up becomes invalidated, and you are highly likely to be wrong, regardless of what time-frame you choose to trade from.

hope this helps

 

[wallstreetwarrior87]

I am sure there will be lots of differing opinions on this, but from my experience and from books I have read, trading the medium-term timeframes (1-2 months) is a far easier and safer route than other shorter timeframes. Some reasoning being with shorter timeframes stops need to be tighter and volatility makes life more difficult. Some book/web opinions that agree with this:
- Stan Weinstein's "Secrets for Profit in Bull and Bear Markets":
"Buying on Monday and selling on Tuesday is smart only if you want to make your broker rich"
- Robbie - The Naked Trader:
again, day trading is is fine if you want to make your broker rich...
- financial-spread-betting.com, SB company quote:
"some of our most successful clients hold for 6-8 weeks..."

Note: I'm not saying you can't be successful at short term trading, of course you can. It just seems for the novice/inexperienced trader (note not Investor), longer term is easier. However, I do think the psychological requirements and need to be in a trade
cause alot of us newbies to pick the shorter time frame.

If you take away the time and price axis on your chart, you will be unaware what timeframe it is, so it is irrelevant. All TF have the same characteristics, the only difference is the required reaction time of the individual user of the information.

It is natural human behavior to want to have time to make a decision, and this is the main reason why many books etc promote this idea. It is a case of having to change yourself if you want to adapt.

 

[leonarda]

i think your time-frame depends more on your lifestyle, particularly how much time you can devote to watching the markets and placing trades, and also how engaged in the markets you want to be. Assuming you have a full time job, you could look at the weeklies and dailies in the instruments you choose and only have to spend an hour or two at night watching your charts and doing some analysis - i used these when I started out, and found it great because i only placed a trade once, maybe twice a week but i was watching the market each day for a potential set-up, which was enough to keep it interesting and keep me engaged in the markets - any longer and I'd have found it a bit boring. In regards to your stops, I think these are a function of your set-ups i.e you should place a stop where your set-up becomes invalidated, and you are highly likely to be wrong, regardless of what time-frame you choose to trade from.

hope this helps

yes agree. Although your last point on stops actually eludes to what I was talking about longer time frames being easier. With shorter time frames you have to get your entry closer to the "invalidated" level, so as to get a good R:R, but with longer time frames your reward is larger, hence your stop can be larger for the same R:R, hence making entry easier and thus profits in general easier as long as you stick to good money management etc..

 

[leonarda]

All TF have the same characteristics,

not sure I agree with this, the frequency and magnitude of volatility on a shorter time frame is more significant than longer timeframes.

 

[wallstreetwarrior87]

not sure I agree with this, the frequency and magnitude of volatility on a shorter time frame is more significant than longer timeframes.

Are you keeping the same scaling when you are observing this?

Why is it more significant?

 

[leonarda]

Are you keeping the same scaling when you are observing this?

Why is it more significant?

I do see what you mean.
However, I do think getting the win consistency is easier with longer time frames, as the medium term trend is more defined, whereas within a day a stock can trade pretty much all over the place. Also, what's probably the best point is that longer term you have a much better chance of catching the really BIG moves.
I do see where you're coming from though.

 

[leonarda]

Are you keeping the same scaling when you are observing this?

Why is it more significant?

I do see what you mean more now, but I just feel as though it is easier longer term, mainly based on my experience. Maybe i'm just rubbish short term! but I don't have the time from short term anyway.

Maybe some others can add their views...?

 

[Black Swan]

Hmmm...always makes me smile when I see folk suggesting longer term TFs "because you can take more time on entry"...Yep, that's it, take as long as you like as profit ticks away...You can also spend more time on exit as you watch your profit vapourise before your eyes... or overnight if your trailing stop isn't hit or your stop blasted through (sorry Guv, it's slippage in it? ) Also longer term TFs = compulsory bigger stops, how's your tolerance for risk when the trade is 120 pips down but your signals are still screaming stay in and not swing the other way..? In my experience your (average) loss per trade off the 15min TF will be circa 22 pips..you take the loss, no time to sulk and lick your wounds..

Best TF for a new trader if trading FX? IMHO a TF that makes you do more and think less and take enough trades each day in order to learn the job and lose the fear. Trade one security, for example the Euro, off either a 10 or 15 min TF. Do it for a year..At any time during that year you could also add trading off a 2-4hr TF..

If I could change one thing It would have been the unnecessary pressure I piled on myself trying to do too much to soon. You can relax with one security off a 15 min, on an average trading day (from 8-4/5pm) you'll get max 4-5 decent set ups a day, more likely 1-3, luverly relaxed stuff..

 

[leonarda]

Hmmm...always makes me smile when I see folk suggesting longer term TFs "because you can take more time on entry"...Yep, that's it, take as long as you like as profit ticks away...You can also spend more time on exit as you watch your profit vapourise before your eyes... or overnight if your trailing stop isn't hit or your stop blasted through (sorry Guv, it's slippage in it? ) Also longer term TFs = compulsory bigger stops, how's your tolerance for risk when the trade is 120 pips down but your signals are still screaming stay in and not swing the other way..? In my experience your (average) loss per trade off the 15min TF will be circa 22 pips..you take the loss, no time to sulk and lick your wounds..

you obviously have not traded this timeframe as what you say here is nonsense, it's nothing like that. In fact as wallstreetwarrior says the entry/exit is the same whatever TF, which is correct. What you say about stops etc shows you haven't traded this TF. Typical stop is say 5-8%, average winning trade 10-20% etc...
120pips/22pips if it's the same money makes no difference!

 

[glyder]

Hi Leonarda,
I think its really what suits your lifestyle as to style of trading you develop.
For me as I don't want to oggle a screen all day, I go for some 4 hour set ups, and dailies...need less time spent managing and kicks the ass of shorter TFs for profits, esp when you get a runner.
In terms of stops I keep them very tight, I find doing this sometimes you win, sometimes you miss out,
but more importantly you don't lose big. The runners more than make up for the trades that get stopped out.
Learning to trade dailies meant I don't have to be tied to a PC. Trading is about doing things other than trading.

 

[leonarda]

Hi Leonarda,
I think its really what suits your lifestyle as to style of trading you develop.
For me as I don't want to oggle a screen all day, I go for some 4 hour set ups, and dailies...need less time spent managing and kicks the ass of shorter TFs for profits, esp when you get a runner.
In terms of stops I keep them very tight, I find doing this sometimes you win, sometimes you miss out,
but more importantly you don't lose big. The runners more than make up for the trades that get stopped out.
Learning to trade dailies meant I don't have to be tied to a PC. Trading is about doing things other than trading.

yep 100% concur with you. That's exactly why I choose this TF, since I don't have the time for anything shorter, and I am doing very well at it!
I do feel it's an easier TF for novices, just not sure why though...

 

[robster970]

I do feel it's an easier TF for novices, just not sure why though...

Mistakes happen faster and more frequently on shorter timeframes because basic competences have not developed and longer timeframes allow you to make decisions more slowly and under less pressure.

I said this in my first post, it's the essence of what BS has said but it's not the answer you are looking for clearly.

Try trading off M5 for a week - you'll see what I mean.

 

[FX Bandit]

Hi Leonarda,

You're right about it making no difference. I would be very wary of listening to BS's BS ( cba tbh, you should be able to make at least 2% a day or give up, fer fook's sake).

The choice of timeframe is very personal, and it's impossible to give someone a definitive answer (leaving aside lifestyle and so on).

The advantage of higher TFs, particularly if you are inexperienced, is that you simply have more time to think and are less rushed. Shorter TFs require faster decision making, which is hard until you have sufficient experience to fully evaluate the situation quickly. For most people I would imagine that this comes only with experience.

Shorter TFs also encourage over-trading, offer more frequent opportunities for "revenge" trading and so on. If you're on daily for example, you have more time - to cool down, check your plan, evaluate what went wrong and so on.

So the advice to start on higher TFs is generally sound. That said, they don't seem to suit me and I did all my learning on short TFs. The key though is to do it on demo, then small amounts, so and so on, so that you can survive long enough to give yourself a chance.

In my opinion, experience will solve most problems as long as you're willing to be sensible and put the work in.

As another poster said, cover up the time, a chart's a chart. It's just whether you can use it effectively in the time you have.

It's up to you, higher TFs might not suit you. Just make sure you protect your capital whilst you're learning (or indeed trying any new aspect of trading). That means demo or trading small until you become proficient, and working up from there.

 

[robster970]

You're right about it making no difference.

I don't buy that at all - let me try and give an example - I'll use ES if you don't mind.

So a trade opportunity turns up on H4 as the 20MA is broken and once confirmed you can see it's 16pts away from the high/low that it came from. Why would you enter on the confirmation when you know it will retrace close to the high/low and take you to say an entry of 4pts off the high/low?

Same applies for an exit.

You've shrunk your risk hugely on the entry by getting a better entry because you are able to read lower TF's. Additionally you can take a greater profit on the exit for the same reason. Yet I'm still trading off H4.....

It boils down to competence in your trade execution and squeezing every last pt out of every entry and exit you take. That's what BS is trying to say IMO, not the semantics of arithmetic risk measurement in relation to your account size.

 

[FX Bandit]

I don't buy that at all - let me try and give an example - I'll use ES if you don't mind.

So a trade opportunity turns up on H4 as the 20MA is broken and once confirmed you can see it's 16pts away from the high/low that it came from. Why would you enter on the confirmation when you know it will retrace close to the high/low and take you to say an entry of 4pts off the high/low?

Same applies for an exit.

You've shrunk your risk hugely on the entry by getting a better entry because you are able to read lower TF's. Additionally you can take a greater profit on the exit for the same reason. Yet I'm still trading off H4.....

It boils down to competence in your trade execution and squeezing every last pt out of every entry and exit you take. That's what BS is trying to say IMO, not the semantics of arithmetic risk measurement in relation to your account size.

One needs to adjust for the scale of course. But that's all. Honestly, in terms of the TF it really doesn't matter to me, with some obvious points excepted such as order flow around key areas and so on.

The "better entries on lower TFs" argument is not a good one in my opinion. I can see it appealing in theory (and of course it does sometimes happen that you can take an M15 trade and it turns into something longer. But I think this is rare in practice.

I'm not sure what this means: "not the semantics of arithmetic risk measurement in relation to your account siz".

The point is that regardless of pips or points, my risk is the same, because my position size is determined by overall risk. I would be wary of the X-pips brigade, unless it's just colloquialism or shorthand.

Saying "I made 50 pips" is meaningless without knowing the risk involved.

Trust me, BS is a BS artist - read back over his posts.

 

[leonarda]

Hi Leonarda,

You're right about it making no difference. I would be very wary of listening to BS's BS ( cba tbh, you should be able to make at least 2% a day or give up, fer fook's sake).

The choice of timeframe is very personal, and it's impossible to give someone a definitive answer (leaving aside lifestyle and so on).

The advantage of higher TFs, particularly if you are inexperienced, is that you simply have more time to think and are less rushed. Shorter TFs require faster decision making, which is hard until you have sufficient experience to fully evaluate the situation quickly. For most people I would imagine that this comes only with experience.

Shorter TFs also encourage over-trading, offer more frequent opportunities for "revenge" trading and so on. If you're on daily for example, you have more time - to cool down, check your plan, evaluate what went wrong and so on.

So the advice to start on higher TFs is generally sound. That said, they don't seem to suit me and I did all my learning on short TFs. The key though is to do it on demo, then small amounts, so and so on, so that you can survive long enough to give yourself a chance.

In my opinion, experience will solve most problems as long as you're willing to be sensible and put the work in.

As another poster said, cover up the time, a chart's a chart. It's just whether you can use it effectively in the time you have.

It's up to you, higher TFs might not suit you. Just make sure you protect your capital whilst you're learning (or indeed trying any new aspect of trading). That means demo or trading small until you become proficient, and working up from there.

thanks FX bandit, you've hit the nail on the head explaining that. Makes perfect sense now, more thinking, less rushing, less misstakes etc..
Also, as you say find the TF that suits you and your circumstance, and that's longer TFs for me, I like it, fits in with my day job, and i'm doing very well at it.
Thanks again.

 

[leonarda]

Mistakes happen faster and more frequently on shorter timeframes because basic competences have not developed and longer timeframes allow you to make decisions more slowly and under less pressure.

I said this in my first post, it's the essence of what BS has said but it's not the answer you are looking for clearly.

Try trading off M5 for a week - you'll see what I mean.

thanks it was the answer! I just didn't understand it to start with.
Cheers

 

[Black Swan]

you obviously have not traded this timeframe as what you say here is nonsense, it's nothing like that. In fact as wallstreetwarrior says the entry/exit is the same whatever tf, which is correct. What you say about stops etc shows you haven't traded this tf. Typical stop is say 5-8%, average winning trade 10-20% etc...
120pips/22pips if it's the same money makes no difference!

lol..