Which Chart Time Frame Do You Prefer?

tommog · Nov 3, 2005

Just out of interest i am asking really.

I think lots of newbies get drawn to short term trades but from a few years trading experience i would have to say this is a foolish way to trade forex, the markets move in such wild swings having anything less than a 20 pip stop is very risky.
Personally i think it is best to work from an hourly and 4 hourly chart and look for at least 50 pip moves sometimes more, with around a 25 pip stop loss.
What is your personal approach? Any traders out there that have consitently made more money from a 5- 15 min chart? I see the shorter time frames flawed because in order survive in trading one should have around a 1:2 risk reward model i feel. Assuming you have a stop of 15 to 20 pips i always found finding a 30-40 pip move on shorter time frames a high risk approach.

Tom

shano · Nov 3, 2005

I currently work off daily and 4-hour charts for viewing trends and S/R, and 4-hour and hourly charts for entry. Occasionally a 15 min chart depending on mood. Although I've had some success at using 5min and 1min charts to scalp ten pips here and there (finding short-term ranging channels and trading the swings), it really doesn't suit me. I have a day job so can't stare at a screen all day.

Don't you find even a 25 pip stop loss a bit arbitrary? I've found stop losses below or above S/R to be more effective, especially when looking at the long-term trend, and these invariably end up to be from 30 to 60 or 70 pips depending on the pair.

tommog · Nov 3, 2005

"Don't you find even a 25 pip stop loss a bit arbitrary? I've found stop losses below or above S/R to be more effective, especially when looking at the long-term trend, and these invariably end up to be from 30 to 60 or 70 pips depending on the pair."

Yes i think even 25 pip is quite limiting but it depends on your time frame, i only ever place stops outside S.R levels so i would have to agree with you on that. The thing is if you are setting a stop 30-60 you are required to find a fairly substantial move to fit in with a good money management system. I think the key to successful trading is finding realistic targets that fit in with your risk model. E.g 10 pip SL with a 20 pip target- its relatively easy to capture a 20 pip move but to get by with only a 10 pip SL would require an outstanding entry price, its a balancing act

Tom

JTrader · Nov 3, 2005

Which Chart Time Frame Do You Prefer?

Timescales > 5-minute charts.

ampro · Nov 4, 2005

tommog said:
Personally i think it is best to work from an hourly and 4 hourly chart

Sure makes life easier scanning from the larger timescale angle. I guess the stop deployment depends on your particular method of working? Sometimes, depending on entry & management, you'll require larger cushioning according to the level-execution area etc.

Have never been able to fully understand why folks would want to do battle on sub hourly frames myself. Wood from the tree's analogy springs to mind, but each to their own.

I think most (retailers) folks have a tendancy to overtrade anyways, and knocking trades out off the faster frames merely compounds the cycle. Plenty of decent intraday punts to be found via the hourly if you take the time to sit & wait for them.

But then, patience/discipline isn't exactly high on most newbies agenda, which is why most who punt consistantly via the fast frame triggers haemorrage pretty rapidly.

Anonymous · Nov 5, 2005

A one-hour chart for position trading works fine.

10 to 15 pips stop works well if the bid-ask spread is tight, like about 2 pips wide (even using a Level 2 or direct access don't make much difference).

Forex for the major currencies are pretty predictable. Although I often miss out on the 200-300 pip moves by having my entry point a few pips too far away.

A 5-second chart can be used to scalp for 5 pips risking 10 pips. If you don't mind staring at the screen the whole day looking for the runaway signal, aim and shoot. The opportunity arises about once in an hour, sometimes none.

FOREXHUSKY · Nov 12, 2005

try 15min and 60min

I use 15min as trigger and 60min to find key supp/res levels.
Withs stops around 30-40pips im looking for moves around 100-300pips.
It can be done with pivot zones,trend lines,and 6day ema.
Or all in one.
on high risk you can made fast nice profits,ONLY if you are master in your system.
Take a look at statements from this month.

djl · Nov 12, 2005

good skills forexhusky

Akuma99 · Nov 14, 2005

I personally perfer the 30M and 1H charts, with a peak at the 4H at times for trend confirmation etc. I rarely trade with stop losses above 20 pips, but with a trend following system this can be a little easier to manage.

Over the Top · Nov 14, 2005

FWIW I trade the 5min. I have the daily for higher level trend, 1 min for entry/exit timing and tick for vol proxy.

Stops are v. tight as I only enter with confirmed break of S/R.

Baruch · Nov 14, 2005

Over the Top said:
FWIW I trade the 5min. I have the daily for higher level trend, 1 min for entry/exit timing and tick for vol proxy.

Stops are v. tight as I only enter with confirmed break of S/R.

If you want to trade the news, you need 1 min and 5 min charts. If you love action, you need short timeframes.

Over the Top · Nov 14, 2005

Livermore said:
If you want to trade the news, you need 1 min and 5 min charts. If you love action, you need short timeframes.

Shorter tiemframe than 1min is the tick. They don't get much shorter... :cheesy:

zuke · Nov 14, 2005

I use 15 min, hourly, 4 hourly and daily. I generally only use the 15 min and hourly for entry and 4 hourly and daily for longer term positions.

bbjit · Nov 14, 2005

Weekly

I trade from the weekly charts on 12 to 15 crosses and doing great...I tried "daytrading" but it did not fit my personality.

tommog · Nov 15, 2005

Gamma,

I'm pleased you agree with my views. When I started out trading, for me, it was the shorter the time frame the better, I think something to do with the fact it is so fast moving it appeals to gamblers instincts with what looks a viable setup forming every few minutes. However as I have had more experience with professional traders/banks etc you soon get learn that in Forex (cant speak for futures traders) it would actually be frowned upon if you went for very short term moves off of very short term time frame. I believe a 15 min chart is ok fine tuning entries but for initial market analysis it has to be an hourly chart or longer. Try and capture the larger moves and suddenly the market bcomes less cluttered and does wonders for your bank balance.

Tom

tommog · Nov 15, 2005

Hi Gamma,

Very interesting to hear you trade without the use of a chart. I used to be a broker in the Veg Oil market and met many traders that only needed a calculator and a mobile phone to trade and once saw a trader buying Unilevers' entire DEC delivery of Soybean Oil whilst I was having lunch with him in a swanky London Indian Restaurant. Their positions were not speculative and I am pretty certain yours are however they still needed to be aware of getting a good price and keeping their books balanced. This just demonstrates that in order to be a good trader you must live and breath the markets and always know where it is trading at and where this fits into the bigger picture.

Tom

888 · Nov 15, 2005

Prefer to scalp 5 to 15 pips , in and out . Use 5 min and 1 min chart for these bread and butter trades. Then use another trade platform , use 30 min , 60 min, day charts for longer term trades. 20 to 50 pips. I prefer to take what the market gives me and not be greedy .......

Gwenallt · Nov 17, 2005

bbjit said:
I trade from the weekly charts on 12 to 15 crosses and doing great...I tried "daytrading" but it did not fit my personality.

Be interested to learn details of trading from weekly charts. For me, trading activity is limited to evening and w/ends, so this could work for me.

Any specific info well received,
Thank you,
G.

bbjit · Nov 17, 2005

Gwenallt

as I stated in my previous post it is all in your personality, you might have only evenings and weekends to trade but if your trading plan does not fit you who you really are it would be almost impossible to be successful, I can give you as a start just a simple "trading system" and if you can follow these rules to the tee without hesitating or hardly any mistakes........good luck

Buy and sell on 52 week highs or lows with an appropriate stop, exit and target points as well as a re-entry plan if you get stopped out with a loss, make sure your reward to risk ratio is at least 2 to 1. Oh and do not risk more than 2% of your total bank on any position.

Happy trading

Akuma99 · Nov 18, 2005

I came into trading wanting the "excitement" of short term trading, starting on 5M charts ... moving to 15M. While profitable, I found it a drain to be constantly monitoring trades that were netting 10-20 pips on average, once I moved to 1H/4H charts, trading became so much more relaxing for me and something I could sit back and enjoy. I agree with the sentiments, that it is up to what suits your personality and the lifestyle you want to lead.

Which Chart Time Frame Do You Prefer?

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