trading the trend. What timeframe ???

[sweed73]

Hi all, I am trying to get to grips with price action trading. Now reading Al brooks where he is trading the 5min charts and he talks about trading in the direction of the trend, what has always puzzled me is the question is this the trend on the 5min chart ? which can look totally different than other timeframes. Also the amount of bars on the screen ? on a 5 min chart what is the ideal amount of bars to have displayed ? again this totally throws me with regard to the trend which changes or looks different depending on the amount of bars displayed ??.
What am i missing. ??

 

[the hare]

thats a very intelligent question, but there's more than one answer. My advice would be as follows:

find a consistant and objective method to determine trend direction. You can use anything you like, but I'd probably start simple and use something like the zig zag indicator, you can get more sophisticated later. If the zz is pointing up between points A and B, the trend is up, and vice versa. Dont get to hung up on what parameters you use, just be consistant.

Now take all of the profitable trades from the method you are trading, and for each one determine the historical trend at the time the trade was taken as defined by your zz indicator in as many timeframes as you can. You should find that a particular trend timeframe stands out from the rest.

for example say you have 1000 winning buy trades from a scalping type system. What you should find is that for 500 of those trades the weekly trend was down, and for 500 the weekly trend was up. Therefore the weekly trend is not significant.

If you find on say the 15 minute timeframe that 800 of those winning buys occurred when the 15 minute trend was up, then this timeframe is significant (you should also find that most of your losing buys occurred when the trend was down in this timeframe)

Once you've established a ballpark trend timeframe you can get a bit smarter about how you define trend.

that should get you started.

after that, read bbmacs threads here at the zoo, he has some sensible things to say about this stuff

 

[wackypete2]

Good stuff from "the hare" guy.

Peter

 

[NVP]

Hi all, I am trying to get to grips with price action trading. Now reading Al brooks where he is trading the 5min charts and he talks about trading in the direction of the trend, what has always puzzled me is the question is this the trend on the 5min chart ? which can look totally different than other timeframes. Also the amount of bars on the screen ? on a 5 min chart what is the ideal amount of bars to have displayed ? again this totally throws me with regard to the trend which changes or looks different depending on the amount of bars displayed ??.
What am i missing. ??

if you want a phd in Price action look up Lance Beggs in Aus.....heavy but pretty comprehensive

N

 

[Enzzo]

thats a very intelligent question, but there's more than one answer. My advice would be as follows:

find a consistant and objective method to determine trend direction. You can use anything you like, but I'd probably start simple and use something like the zig zag indicator, you can get more sophisticated later. If the zz is pointing up between points A and B, the trend is up, and vice versa. Dont get to hung up on what parameters you use, just be consistant.

Now take all of the profitable trades from the method you are trading, and for each one determine the historical trend at the time the trade was taken as defined by your zz indicator in as many timeframes as you can. You should find that a particular trend timeframe stands out from the rest.

for example say you have 1000 winning buy trades from a scalping type system. What you should find is that for 500 of those trades the weekly trend was down, and for 500 the weekly trend was up. Therefore the weekly trend is not significant.

If you find on say the 15 minute timeframe that 800 of those winning buys occurred when the 15 minute trend was up, then this timeframe is significant (you should also find that most of your losing buys occurred when the trend was down in this timeframe)

Once you've established a ballpark trend timeframe you can get a bit smarter about how you define trend.

that should get you started.

after that, read bbmacs threads here at the zoo, he has some sensible things to say about this stuff

Great thoughts there

 

[ChocolateDigestive]

look at the 30 second chart with a 3 and 8 sma crossover as entry.

 

[Mike Kshemaraja]

Hi all, I am trying to get to grips with price action trading. Now reading Al brooks where he is trading the 5min charts and he talks about trading in the direction of the trend, what has always puzzled me is the question is this the trend on the 5min chart ? which can look totally different than other timeframes. Also the amount of bars on the screen ? on a 5 min chart what is the ideal amount of bars to have displayed ? again this totally throws me with regard to the trend which changes or looks different depending on the amount of bars displayed ??.
What am i missing. ??

A very reasonable question. Many traders look at it in many different ways, there is not right or wrong, the best way is to find a way that make sense to you and reflects your personality.

My opinion:

If you trade the 5m TF do not look at a bigger time frame for direction, in my view that is just a myth, stay in your TF and go back no more than 20 hours, keep things simple.

Al Brooks also uses the 20 ema (if I am not wrong) to establish the various (more than 2 hours without touching the price meaning stronger move) strengths of the trend. Very valuable in my opinion.

Those 20 hours will be enough for you to evaluate. I trade the 30s and two hours of data for me is plenty. (sometime when I get anxious I got back more, LOL)

The direction will be given to you by the formation of higher lows and higher highs and viceversa in a trending market and the print of double and triple tops need to be taken in consideration for a change or stalling of the movement.

Keep in mind that the underlying conditions of the market needs to be taken also in consideration, because the technicality of it have a different mean if the market is in a ranging mood compared to a trending one.

Hope my view (wrong or right) helps you.

 

[petersol]

You have to use multiple time frames to see the trend.

 

[RenkoTrades]

I like to use Renko charts for my trigger charts and my high time frame charts, but I have studies to identify trends on both charts - micro and macro trends. I don't like time based charts for my lowest time frame trigger charts - tick, volume, range bar, or Renko's are best imo. I stick with Renko's as my primary periodicity to smooth out much of the micro price action cycling - that I do not need to see when looking for trade entries per my system triggers.


For my CL, TF, DAX, and 6E trading it is all Renko's (and some Heiken Ashi charts too - just no time based periodicities). I have found price action momentum based indicators read more clear when I move to Renko based charts, and less false signals in micro price action cycling. Try it and see what you think.

Renko candlestick def - http://www.investopedia.com/terms/r/renkochart.asp#axzz1u6iQONfk

 

[NVP]

if you cant see the trend by simply looking on the chart ....then there is no trend

N