How to gauge short term reward

[jamesj188]

if you day trade and you buy a stock,

which time frame's next level of resistance do you consider most
(or think has the biggest influence) to your daytrade's potential gains?

Daily or 60m or 30m or even 5m????

 

[Rhody Trader]

What time frame analysis did you use to decide to buy in the first place? You should use the same for your exit decision.

 

[amit1986]

You can keep an eye out on all time frames by having different charts of various time frames open on another screen.

One of my screens is dedicated to having the 3-minute, 5-minute, daily, weekly, and monthly charts of the stock I am watching. This gives me an overall perspective of long-term and short-term trends, as well as potential points of support/resistance in my trading.

Also, it can help you decide where you think there could be a pickup in volume as those support/resistance areas break.

 

[hoodoo man]

What time frame analysis did you use to decide to buy in the first place? You should use the same for your exit decision.

No, that is not correct. The timeframe which is relevant to what is happening in the market changes on an ongoing basis. The one which is most relevant to your exit is that timeframe which will reverse the market so you give back your gains. You are looking to exit at the top of the upswing. The timeframe belonging to that upswing is set by the market, and not the timeframe you chose when entering the trade.

It is not logical that your entry timeframe should bear any relation to your exit timeframe.

Example. In the silver market, even if you entered back last August on a daily chart, your exit should be hourly chart or lower to catch the top around $50. If you used a daily chart, your exit is late and you give back around 10% of the value of the commodity, or $5 out of the $30 dollars you made on the trade.

 

[jamesj188]

I dont know but I personally prefer to keep an eye on all timeframes.

 

[Rhody Trader]

No, that is not correct. The timeframe which is relevant to what is happening in the market changes on an ongoing basis. The one which is most relevant to your exit is that timeframe which will reverse the market so you give back your gains. You are looking to exit at the top of the upswing. The timeframe belonging to that upswing is set by the market, and not the timeframe you chose when entering the trade.

It is not logical that your entry timeframe should bear any relation to your exit timeframe.

Example. In the silver market, even if you entered back last August on a daily chart, your exit should be hourly chart or lower to catch the top around $50. If you used a daily chart, your exit is late and you give back around 10% of the value of the commodity, or $5 out of the $30 dollars you made on the trade.

And how many times along that silver market uptrend would an "hourly chart or lower" have gotten you out of the trend, causing you to miss out on further gains? If you are tempted to answer with something about being able to get back in again then I'll say you are, in fact, playing in a shorter-term timeframe, not the daily chart one in which the broader trend is operating.

The timeframe you are trading in determines the price volatility you expect to see within the move you are looking to play. That, in turn, factors into the risk management decisions you make, like position size and negative exit point (aka stop). If you operate with a variable timeframe approach to individual trades (putting aside the problem of trades which exceed your ability to properly manage them because you cannot follow the market during the required time), then you will necessarily be operating at a much less than optimum risk management level.

 

[temporarilylight]

No, that is not correct. The timeframe which is relevant to what is happening in the market changes on an ongoing basis.

Could you elaborate on that point a little? It changes based on what? How do you determine what timeframe the market is currently 'playing too'??
thanks

 

[alexander]

Hourly charts are the best for short term analysis.