As a daytrader I heard people saying they use smaller time frames to detect entry points and manage there trade how can one detect there entry point on a smaller time frame? Like for instance my friend who lives in canada trades the YM dow and she trades off of a 3min chart for her setup's but she uses a 89 tick chart with heikan ashi bars to pin point her entry point. the time frames are all the same price how can I look at a smaller time frame to detect a entry point why I cannot look at the same chart that I trade from to make my trade and detect entry point???? Need serious help!!!! I trade the forex trying out a new style.
Take the example that you trade off an hourly chart and you are looking to go long.
If you 'zoom in' to a 5 minute chart, the price action and volume will be much more detailed. The information you get from the 5 minute candles will enable you to choose a more precise entry that may be beneficial to you that you won't necessarily be able to pinpoint by staring at the one hour chart.
So in the above example - let's assume there has been a selloff of 100 ticks over the last hour and the price is approaching a support level where you are looking to go long. What do you see on the hourly ? A long red candle.
If you then 'zoom in' to the 5 minute chart, there may be a reversal pattern forming. A doji/ morning star/ engulfing pattern etc etc. None of this would be obvious from the hourly chart.
You can then choose a better entry point from the 5 minute chart to make the most of your long on the hourly timeframe.
Hope that makes sense
Paulie
If you 'zoom in' to a 5 minute chart, the price action and volume will be much more detailed. The information you get from the 5 minute candles will enable you to choose a more precise entry that may be beneficial to you that you won't necessarily be able to pinpoint by staring at the one hour chart.
So in the above example - let's assume there has been a selloff of 100 ticks over the last hour and the price is approaching a support level where you are looking to go long. What do you see on the hourly ? A long red candle.
If you then 'zoom in' to the 5 minute chart, there may be a reversal pattern forming. A doji/ morning star/ engulfing pattern etc etc. None of this would be obvious from the hourly chart.
You can then choose a better entry point from the 5 minute chart to make the most of your long on the hourly timeframe.
Hope that makes sense
Paulie
meanreversion
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You should look at many time frames as a matter of course, simply to get an idea of the nature of the market. The dailies will give you a clue as to the overall trend.. weeklies are too long for my liking but I trade mainly off 4hr closes.
Something to keep in mind about lower timeframes...
Some traders trade lower time frames because they think that more frequent trades will lead to faster compounding of their money. This is not necessarily true, especially due to the randomness of intraday movement. When traders lever up take advantage of the smaller pip moves, the cost of the spread starts becoming more of an issue, especially when you are paying it several times a day as opposed to twice a week, for example.
BE CAREFUL OUT THERE!
All the best,
Kris Matthews
Some traders trade lower time frames because they think that more frequent trades will lead to faster compounding of their money. This is not necessarily true, especially due to the randomness of intraday movement. When traders lever up take advantage of the smaller pip moves, the cost of the spread starts becoming more of an issue, especially when you are paying it several times a day as opposed to twice a week, for example.
BE CAREFUL OUT THERE!
All the best,
Kris Matthews
fernanj
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Hi Nevets - welcome to the exciting world of technical analysis (more like technical confusion when you start out)...
Knowing how to use Time frames effectively are a very important part of a traders arsenal and believe me there is an order to this... let me explain, to start off with, you must have a trading time frame that you stick to, in other words you always use this to enter your trades, lets say that this is a 10 minutes chart.
There are two basic requirements that must apply here- the first one is you must look at two or more higher time frames to determine the major move / trend, in other words this will prevent you from trading against the major move or trend on your 10 minute time frame.
The second one - is before you place your trade on the 10 minute chart you must look at a lower time frame for confirmation and timing of the entry.. a classical example from my trading experience a "retracement " (in an uptrending market) on a 10 minute trending chart can be confirmed, and will show as an "oversold signal" on a 5 minute chart.
In other words the 5 minute chart has confirmed that this is a retracement and the up trend will continue (with the highest possible probability)!
Take a peek at my web site for more of an insight on time frames
All the best with your trading
Joe
Stock Market Trading, a Powerful Profiting Strategy
rathcoole_exile
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I don't use any TF, I just use PA :|
B
Black Swan
Hi Nevets - welcome to the exciting world of technical analysis (more like technical confusion when you start out)...
Knowing how to use Time frames effectively are a very important part of a traders arsenal and believe me there is an order to this... let me explain, to start off with, you must have a trading time frame that you stick to, in other words you always use this to enter your trades, lets say that this is a 10 minutes chart.
There are two basic requirements that must apply here- the first one is you must look at two or more higher time frames to determine the major move / trend, in other words this will prevent you from trading against the major move or trend on your 10 minute time frame.
The second one - is before you place your trade on the 10 minute chart you must look at a lower time frame for confirmation and timing of the entry.. a classical example from my trading experience a "retracement " (in an uptrending market) on a 10 minute trending chart can be confirmed, and will show as an "oversold signal" on a 5 minute chart.
In other words the 5 minute chart has confirmed that this is a retracement and the up trend will continue (with the highest possible probability)!
Take a peek at my web site for more of an insight on time frames
All the best with your trading
Joe
Stock Market Trading, a Powerful Profiting Strategy
Nice post. Strange how such a simple/straightforward explanation encourages a look at a poster's website. Will check it out.
