Time-frame and analysis - different signals

[asv]

Hi all,

I'm a little green here, but I was unable to find any threads treating this issue - I might have overlooked something, so let me know if that's the case.

When using Bollinger bands, the signals somewhat differ depending on what I set as time-frame (1, 5, 10, 15, 30 min, etc.). I understand that what looks bad on a really short time-frame could just be small ocilliations which mean nothing on a larger time-frame. But how do you utilize the time-frame - is it something you decide in your trading strategy that you want to keep yours on, say, 10 minutes, and then that's what you look at despite the different signals if you move it to 5 minutes.

An elaboration on this issue would be really nice - thank you!

/asv

 

[trendie]

asv,

You have pointed out what is one of the most frustrating aspects of trading using most indicators !!

It was the bane of my trading learning curve, when a signal on one time-frame was a non-signal in another time-frame, or even a conflicting signal !

As a keen user of Moving Averages, this cost me the most time and money, trying to understand and quantify.

My own experience has led me to use channels, and trendlines.

Consider;
if you join a series of notable highs and lows together, to form a trendline or form a channel, those trendlines or channels are true throughout many timeframes, such as 5-min, 30-min, 60-min etc.
T-lines and channels drawn on a 60-min or 4-hr basis, can be seen to remain valid for several days.

These TA basics, for me personally, form the greater part of my analysis these days.
And indicators are used merely to fine-tune entries or exits.

I hope you get some good replies from our more experienced players, as you have highlighted a major issue with regards to trading with TA.
( players who use Price-Volume, and Level 2 probably arent affected, but their inputs would be welcome. )

 

[asv]

trendie, thank you for your input - I guess the issue isn't that insignificant after all

I find it quite amusing that if I stick to the Bollinger bands and I am on a 'good ride' (short or long), and then things start to go a little in the wrong direction, I simply increase the time-frame a notch and everything looks wonderful!

Without going into a specific analysis I will add the following: My own feeling is - without knowing, please help! - that the Bollinger bands are slow in showing a changing trend. I guess I can just test this by saving some screenshots of 'old bands' and then look at them a couple of hours later. But if someone has some input on this, I am all ears!

Thanks!

/asv

 

[Rhody Trader]

trendie, thank you for your input - I guess the issue isn't that insignificant after all

I find it quite amusing that if I stick to the Bollinger bands and I am on a 'good ride' (short or long), and then things start to go a little in the wrong direction, I simply increase the time-frame a notch and everything looks wonderful!

Without going into a specific analysis I will add the following: My own feeling is - without knowing, please help! - that the Bollinger bands are slow in showing a changing trend. I guess I can just test this by saving some screenshots of 'old bands' and then look at them a couple of hours later. But if someone has some input on this, I am all ears!

Thanks!

/asv

I hope by "amusing" you don't mean that you justify holding a position which you may otherwise be getting an exit signal on by looking at a longer-term chart. That's a serious recipe for disaster.

As to Bollingers, they are not intended for use as a directional indication. Check out Bollinger's own words on the subject here.

 

[asv]

I hope by "amusing" you don't mean that you justify holding a position which you may otherwise be getting an exit signal on by looking at a longer-term chart. That's a serious recipe for disaster.

No, the 'amusing' doesn't justify anything except a smile - I merely meant that it provides ground for confusion and unclear signals, when an indicator shows two different things just because I change the time-frame 5 minutes.
However, I would say that I mostly get the exit signals on the shorter-term charts, because if I look at a longer-term, it often fades away...what can I learn from that? anyone?

As to Bollingers, they are not intended for use as a directional indication. Check out Bollinger's own words on the subject here.

Excellent, thank you!