Why do you trade lower time frames?

By lower time frames I mean 1 hour charts and below.

In my (still limited) experience, price movements seem to conform to price targets (i.e support/resistance, fibs) set on 4 hour/daily and to a certain degree, weekly charts. The lower time frames seem to be a lot of smaller up/down movements as they slowly move to these targets that have been set on higher time frames. From a beginners perspective, it would appear that more/bigger traders are moving price based on daily/weekly patterns and day traders work, riding the ups and downs that playout within these larger movements, but ultimately are guided in the direction of these larger movements. Would that be a correct analysis?

I suspect traders on these lower time frames trade largely based on lesser S/R levels that can be found on them but at the same time always having in the back of their minds the price target set on a higher time frame? I would also suspect candle formations play a big part on lower time frames. Would this be right?

Obviously I’m not saying the lower time frames are a waste of time as there are many people that trade them successfully, and prefer to do so for whatever reason. That is what I’m interested to find out.

A few conclusions I’ve come to myself include:


Please add to this or correct where appropriate. Why do traders like to trade lower time frames?

Thanks

http://www.trade2win.com/boards/gen...itable-safer-than-swing-position-trading.html

http://www.trade2win.com/boards/gen...hy-aren-t-there-more-long-term-investors.html

There have been numerous threads about this at T2W. Here's just a few threads from our members. Pro's/Con's to all trading styles, so each to their most profitable...

It's more exciting.

porph said:

It's more exciting.

Click to expand...

I don't want excitement in trading, tbh. I leave that for the stupid sports I like to participate in. Rather keep a cool head so I don't chase the market or trade to alleviate boredom... like I used to.

I use H1 because the higher timeframes have too few signals for swinging with the intention of holding for a day or so; the lower timeframes have too many false ones, though.

The more bored i get, the lower the timeframe goes. Profitability goes along with it.

It is fun (when you gain), and soul destroying (when you lose). What's more, when i enter trades in lower time frames i tend to hang onto losers much longer- thinking 'oh it's only a few points it will turn around', or 'i'll just hang on til i break even then i'll close it out'

I have several spreadbetting accounts. One of them is primarily for the purposes of 'playing' with trades. It reminds me on a daily basis why this strategy is not good, as i see the balance dwindling. Although it costs me a small amount of money, it stops me from entering bad trades with my main account and a large chunk of my capital.

I also have an online poker account, when i want to experience a gambling rush i make myself go over there and play instead. Much cheaper than going in the wrong direction on the FTSE for £50 a point.


p.s. Just wanted to add- when position or swing trading, going to a lower time frame is sometimes a wise and good thing to do in order to time entries and exits.

Tradergirl,

Just my opinion but it may be dangerous to run the "bad strategies" on a small account. I'm not saying its better to do them on a big account but you run the risk of reinforcing habits that could bleed over into your other trading.

nine said:

Tradergirl,

Just my opinion but it may be dangerous to run the "bad strategies" on a small account. I'm not saying its better to do them on a big account but you run the risk of reinforcing habits that could bleed over into your other trading.

Click to expand...

Good point. Need more self-discipline

The day high and the day low are the same on any timeframe.

UKtradergirl said:

p.s. Just wanted to add- when position or swing trading, going to a lower time frame is sometimes a wise and good thing to do in order to time entries and exits.

Click to expand...

I would only do this if the risk is too big a % of your equity on the higher timeframe, however you are much more likely to get stopped out by noise or alternatively exit too early. I trade off the hourly and i've tested a 5, 15, 30 and 60 exit strategy, and the 60 is by far the most profitable to my system. In the long run you're better off sticking to your original timeframe to exit on from which you entered on.

i don't use any time-frame, just price triggers

there is a difference between trading a 5 min chart and and using a 5 min chart as a trigger chart off a higher time frame. with the current volatility 1hr time frame stops, for me, would be huge.

also you can bring higher time frame smas down to lower time frame charts and so 'embed' some of the higher time frame info into the lower time frame charts. eg by using 200sma 500sma on 5 min charts or what have you. you can also adjust other indicators [stochs, boll, etc] to work on lower time frames with higher time frame information. so say for easy maths 1 hour info onto 10 min charts. that is a factor of six. so a 10 sma on a 1hr becomes 60sma on a 10 min, 20 sma becomes 120sma etc

oiltanker said:

there is a difference between trading a 5 min chart and and using a 5 min chart as a trigger chart off a higher time frame. with the current volatility 1hr time frame stops, for me, would be huge.

also you can bring higher time frame smas down to lower time frame charts and so 'embed' some of the higher time frame info into the lower time frame charts. eg by using 200sma 500sma on 5 min charts or what have you. you can also adjust other indicators [stochs, boll, etc] to work on lower time frames with higher time frame information. so say for easy maths 1 hour info onto 10 min charts. that is a factor of six. so a 10 sma on a 1hr becomes 60sma on a 10 min, 20 sma becomes 120sma etc

Click to expand...

Taking an MA from a higher TF to a lower one doesn't quite give you the same info because the amount of info available to calculate the MA is greater. I think it does work the other way round, though (taking an MA from a lower TF to a higher one).

Trading on the lower timeframes allows tighter stops which makes you much more proficient than any trader out there.

I especially like to buy when the market is locked limit down. It can't fall any further.

...UNSUBSCRIBED

I'm only tried lower timeframes and had nothing but losses. the indicators change too quickly, you think the Stochs are about to roll over then BAM they turn back up.

I am now demoing using 1 hour and getting better results

yes the ma's are not exact but if the lower time frame is a trigger chart rather than a strategy chart its good enough for me.

...ou think the Stochs are about to roll over then BAM they turn back up...

each person has to choose their own time frame and strategy?

shadowninja said:

I don't want excitement in trading, tbh. I leave that for the stupid sports I like to participate in. Rather keep a cool head so I don't chase the market or trade to alleviate boredom... like I used to.

I use H1 because the higher timeframes have too few signals for swinging with the intention of holding for a day or so; the lower timeframes have too many false ones, though.

Click to expand...

Was supposed to be slightly tongue in cheek

advfntrader said:

I'm only tried lower timeframes and had nothing but losses. the indicators change too quickly, you think the Stochs are about to roll over then BAM they turn back up.

I am now demoing using 1 hour and getting better results

Click to expand...

Remove the stochs and look for more reliable methods of helping you with your trading. I work mainly off a 1 hr time frame for a longer term trend but, find that many of my most profitable trades are those I entered, early, taken off a 5 min chart.

I would recommend that you don't place too much reliance on the standard technical indicators, such as stochs, MACD, CCI etc. Look at using fractals or chaos fractals as a trading aid. They will give you a much clearer picture of what is likely to happen in the market that you're trading. If you add them to say, 1hr, 15 min and 5 min, you will often find some excellent correlation patterns between the various time frames.

I hope this helps.

porph said:

Was supposed to be slightly tongue in cheek

Click to expand...

Oops. As you were.

My main concerns with the time frames are:
You need to get clear entry (and exit) signals from your chart.
If you exit early, the retracement should give you another entry signal.

rathcoole_exile said:

i don't use any time-frame, just price triggers

Click to expand...

intresting can u be more specific ?