Timeframe Question

[Pat494]

I've been settled now for about a year on 2 timeframes:

1) I use 5M to take some very quick trades around 2 key levels (yesterday's RTH High and Low). The 5M is used to time my entries and exits, entering on momentum and exiting on weakness.

2) I use the hourly for longer trades which typically hold overnight spanning 2 trading sessions (occassionally 3). I time entry off the 5M and these are usually pro-trend on the hourly. Note - I am trading off the hourly but using 5M to time entry and exit.

For both of the above, I know from the daily which way things are swinging and derive whether I'm trading pro or counter trend using this as a frame of reference for both of the above.

The timeframe you use for entry may not necessarily be the timeframe you are trading. It took me about a year to figure this out but once I did, I was on the home stretch.

Interesting. I will give it a try. I have found 1 min too fast as it swings wildly. So sounds about right.
I seem to be better at weekly forecasts and for that I use the 4hour TF.

 

[robster970]

Interesting. I will give it a try. I have found 1 min too fast as it swings wildly. So sounds about right.
I seem to be better at weekly forecasts and for that I use the 4hour TF.

The same way you can tell direction on weekly is equally as applicable on lower TF's except the whole process is speeded up with a bit more noise thrown in.

 

[Pat494]

i said it b4 ill say it again

length of trade is dependent on what your trade is because of!

dammit!

Take it easy DR we are not mind readers

 

[DashRiprock]

diffrent comparisons of information

red square -> red square
stock ABC is underpriced by market
good example: stock trading less than hard asset market cap
bad example: man united are going to win the premiership

green square -> green square
market is over reacting
good example: fading moves from position liquidations
bad example: NFP beat estimates so buy all the way down

yellow square - yellow square
I know something the market doesn't
good example: proprietary model for payrolls data different to concencus estimates
bad example: my aunti beryl is coming from austraila and she'll buy loads of postcards
(or insider trading)

cyan square - cyan square
company A is in better shape than company B
good example: macdonalds will price burger king out of emerging markets
bad example: Im never going to tescos again!

pink dot - pink dot
most technical analysis
good example: pair trading
bad example: RSI crossed from 71 -> 69

purple dot - purple dot
tape reading
good example: market ignores negative data
bad example: there are more bids than offers so buy it

and their applicability

i shud rite a book

 

[robster970]

I bet you Dash, that if you did a Saturday afternoon session like bbmac did, it would get a good turnout and what's more there would be pub lulz afterwards..........

 

[DashRiprock]

iz already sed erything i no

 

[robster970]

don't believe you. come on man, we know you know shizzle.

 

[DashRiprock]

iz already sed erything i no

(if i ever rite a buk then wat i sed here is a lie)

:cheesy:

 

[robster970]

come on. we can do jagerbombs afterwards.

 

[nunrgguy]

I've not annotated it all, can't be bothered. Hopefully you'll see that depending on how long you are planning to hold your position for is important within the bigger picture. It's far harder in real-time.

 

[DionysusToast]

Depends on how you trade.

I day trade and I line to be able to see a day on my charts. I don't like to see individual candles on my charts as they are a distraction and an individual candle means nothing to me.

This shows me where we have been, where the market made major turns and where people might be getting caught offside. For daytrading, that's a fair amount of information to trade from.

This is 500 tick. It could be 300 could be 1000, it wouldn't make much difference.

If the question about timeframes is because the OP wants to read something into individual bars/candles, then in my opinion a re-think is required.

 

[DionysusToast]

lol - I just had this web page open & I actually tried to close that chart in the pic above....

thought my PC had locked up...

what a dunce...

 

[nunrgguy]

Sorry, they seem a bit big for the forum, don't know how to make them fit.

 

[nunrgguy]

Depends on how you trade.

I day trade and I line to be able to see a day on my charts. I don't like to see individual candles on my charts as they are a distraction and an individual candle means nothing to me.

Yeah, I agree in the context of all of the names they're given etc. To me they just make it easier to see certain things, mainly areas of interest and how the market is moving, which is basically direction and speed.

 

[Black Swan]

It seems to me that the longer the TF then the bigger the stop needed

I use 3TFs per pair, the 1HR, 2HR and 4HR, but I 'trade off' the 2HR. imho it helps me get a bigger picture; one above one below.

Tell you what worked when I traded just the EUR/USD, I'd use the same set up for 3 TFs starting with the half hour, and take all 3 trades in a pyramid style of things when the exact same set up alerted on each consecutively, the stop would be different obviously; 40 -75 for the 3 TFs.

What tends to happen is if the lower TF pukes, you don't get the opportunity to fail on the 2nd or third trade as 9 times out of ten they don't trigger or if one does the loss is minimal..

Then if the first pair reached its target/take profit limit order (let's say 50 pips) I'd close all 3, could be a run of 100 pips+..

TBH I may re-visit it as I want/need a lot less screen time and a lot less stress, less pips but much bigger size. I'd just trade the EUR/USD..

 

[forker]

I only work off the 4 hour charts.

 

[DashRiprock]

I have 1 or 2 hypothesis that I work out Pre-market as for what the day ahead will hold. Typically they involve an open-test-drive or an open-rejection-reverse open type, and I like to have someone shaken out before the market auctions in the other direction. I will review these after the first few hours, and then I will make another hypothesis about where the intra-day pain is and consider what these getting taken out means in the broader picture. Then, if it turns out that I am in a position to trade one of these ideas, I will put the trade on, and keep it on until my hypothesis is proven either right or wrong (no overnights).

I don't examine where my stop should go and where my target is, but i do have a general idea of the areas that I am looking to avoid / approach. Of course I have orders resting if the sh!t hits the fan but often my hypothesis has gone against me long before then. I am OK if I take some heat and hold it if I think the original idea remains valid, it's just that I was too early or there are sharper (bigger) operators out there trying to take my position from me.

(how many times have you seen your stop get taken out only to go on and reach your target? who do you think is on the other side of your stop?)

The problem with having stops resting in the market like the typical R:R setup is that it assumes a simple "if we trade at X -> Y is the wrong trade" which doesn't lend itself to trading imo. The problem with my approach is that any "grey area" send you "on tilt"; I mean, somewhere there is a line which defines right trade vs. wrong trade - the problem is that you can't always see what the price will be when you cross it before you get in. The trick is that, when you get to it, don't **** around. get out.

Now I know the common thing is "no where your getting out before your getting in" but that doesn't always work tbh. Setting hard OCO orders is treating the market like a coin tossing game which it isn't (of course, you should manage your risk appropriately by using hard volatility adjusted disaster stops). I spose these R:R pitfalls come with the territory if you are overleveraged (like risk 1% of equity on it getting to X before Y) or making trades based solely on price (a la most technical analysis*). If your grounds for a trade are "price did this so price should then do that, Im wrong if we get to X first and Im right of we get to Y first" then I can see why the R:R mentality is attractive... but the reality of markets is that price is the tail and market participants are the dog. I prefer to keep my eye on the dog and let the tail wag about a bit - ultimately it will go wherever the dog does.

PEACE

* there are legit strategies like this like quant strategies

 

[DashRiprock]

actually ignore me i put it on the rong thread!

 

[kimo'sabby]

lol I would say exactly the opposite.

Think of a weather forecast. You can tell what the weather will be like in the next 5 mins or so by lookin out the window. What will it be like tomorrow? Fk knows.

So by that logic, u are set up as a scalper? How many RTs do you do a day, Dash?


BTW, i am gonna prove your logic wrong, and also the guys who repped u for this post.

 

[DionysusToast]

I think Dash would class as a 'position trader' by my assessment.

It's called 'day trading' - doesn't have to be 30 second trading...