Candlestick chart timeframes

[Tomski]

Hi, guys this is my first post here so hello to everyone.

I have been trading for around 6 months, but only recently become interested in candlestick charts, so far I have not only found them extreme interesting to study, but they have also produces pretty good results.

What I was wondering was which time frame people tend to use for day trading purposes. I understand that people use intraday to work out levels, and then progressively work down to smaller time frames as not to miss any, however I was wondering which is best for pattern recognition for trade entry and exit points. I read somewhere that it was probably best to use 15 mins, however I have recently been looking at other time frames as well, 10, 5 mins. I have found that sometimes they help back up a view and sometimes they produce different patterns making me less confident in my view. Does anybody have any opinions on this?

If this has been posted before then could someone point me to the link to the thread, either way any advice would be appreciated.

Cheers

T

 

[andycan]

Tomski
the time frame is totally dependent on your style of trading
if you are a scalper you want to be looking at the 1 min 5 min and and maybe 30 min
if you are a day trader a 5, 30 or 60 and the daily
if you are swing trader 60, daily, weekly
but in truth there is no 'better' method strictly what makes you happy

 

[Tomski]

Thanks Andy,

I would say that I am a day trader, in that I would tend to attempt to identify trends during the day, and avoid holding overnight positions.

I always used to use 15 min charts, but recently have been looking at 10 and 5. I know many traders fall into the trap of over complicating things by having too much data to work with which causes them to never trade, so I suppose I was wondering if I was following that route by looking at more graphs while trying to identify patterns, especially because these graphs contain more market noise. But as you say it's what you're happy with, so I'm going to see if looking at them helps or hinders me.

Thanks again,

Tom

 

[damianoakley]

Hi Tomski,

If you're choosing to day-trade, then make sure the timescale you choose is appropriate for the market you are trading.

For example, I've met unsuccessful traders who have come to me after trying to trade on a 5 minute chart on a particular stock when the spread of the stock is as wide as the average range of a 5 minute bar.

It would be difficult to overcome the spread cost by trading in this way.


Thanks


Damian

 

[Tomski]

Thanks damianoakley

Like most new traders I am looking at the bund and bobl, so they are very liquid with a 1 tick range spread. I have actually found that the 10 mins chart works quite well but also keep my eyes on the 5 and 15 mins.

The thing is I have heard that the bund and bobl don't chart that well, so the learning curve is quite steep. Anyway onwards and upwards.

Cheers,

T

 

[damianoakley]

Hi Tomski,

May I ask why, as a new trader, you have chosen day-trading as your preferred style?

Day-trading is capital-intensive and time-intensive, and will require many hours in front of the computer screen to make it pay. If this suits your personality then that's ok, but for a beginning trader you may find that you suffer from burn-out quite quickly.

Many traders take the day-trading option because they desire action. In actual fact, day-trading can require a lot of patience and screen-staring whilst you wait for the right time to make your trade. This process is actually devoid of action and can be quite dull, so be sure that you have the right type of personality to handle this. If you don't have the patience required, then your desire for action will make you take on trades that you normally wouldn't want to get into.

Another reason many new traders choose day-trading is because they think that it's the only way to generate enough opportunities to make a profit every month from trading. This is not the case - there are other methods.

Please don't think that I am saying all this to be negative about day-trading - I am just saying that you should be sure it fits your personality before immersing yourself fully in it.


Good Luck

Damian

 

[Tomski]

Damian

I tell a lie, at the moment I am a spread trader in an arcade and I have a bread and butter trade that I’m doing ok with in terms of building up my account. However before I even started doing this I knew what sort of a trader I wanted to be, I have had an interest in the markets for a while and enjoy trying to work out why and which way they will move, hence I knew, and now know, that spread trading wasn’t for me. Because of this I do a lot of work towards trading out rights which I will do when I have enough money in my account, hence my interest in candlesticks.

I use the term day trader because I thought it most suited the way I am paper trading while learning out rights, i.e. I don’t hold over nights because when I go live I won’t want to at first because of the increased risk.

Also in terms of what it entails, I feel I do that just about every day anyway, so won’t really have a problem making the switch. In all honesty, I feel the mindset I have to adopt will be the biggest challenge.

Cheers,

Tom

 

[andycan]

Tomski
i should have mentioned just to give you some insight on how i do it
i have 2 screens first screen i have my RT charts with time frames 2,5,10,30 and 60 also have daily and weekly the second screen my trading platform.
when im scalping i look at the daily for general trend S/R
the 60 i look at market structure(how its moving, up or down is it laboured? is it expanding? is it a blow off? also look at wave structure is the move a correctional or a directional move.
then once im happy i know where it wants to go
i fine tune it with the 5 and then the 2
sounds over done but its second nature to me now
if im daytrading or swing trading the weekly and the daily are dominant
then i fine tune it with the 60 and that is pretty much it
i also dont use candlesticks just your normal ohlc bars
a friend whom i trade with reads candlesticks i never have a clue what he is talking about but we seem to come to the same conclusion most of the times
hope that helps