So what you're saying Vorbis if I don't misunderstand is that risk increases substantially on lower TFs(higher volatility, more noise?). As for the spread it's much higher since you're potentially making more shorter term trades and profiting less from them?
nunrgguy could you give me an example of that? I haven't really read anything indicating which TF's you use as triggers vs your trading TF... I definitely haven't developed my own strategy yet
An example: you see an engulfing bar at a swing low on a weekly chart. The sucker play is to go long directly on the break of the bar with a huge stop who knows where. It's a sucker play as it's likely to get faded. BUT, you now know that there is supply below and you're looking to get in long at the best price you can - i.e. as close to supply as possible. If smaller TF PA dictates you enter on a break then so be it but you will find price coming back at you a lot doing that. The better entry, if you can get it is for a cheaper price. In life we always want to get whatever it is (as long as it's good) as cheap as we can get it yes? Big momentum moves tend to, for a variety of reasons, get faded. i.e. there's a pullback. Now where do you enter, what dictates where you enter? I'd hazard a guess one thing dictating is PA on smaller timeframes. Don't forget that all a chart shows you is a compressed picture of what happened in the past. Higher TF charts get easier to read because of the greater compression.
OK an example (assuming all is perfect in the world and we win everytime
), swing low, momentum up on weekly, price pulls back, entry on a 4 hour chart with price above daily open and somewhere pretty close to the weekly low i.e. you might think you're trading the '4 hour timeframe' because you're looking at 4 hour bars but are you? At the end of the day price is price and charts are illusions. Nice illusions that can give us some information about decent price areas where to position ourselves in the market and about market speed from certain price levels.
You can take it even further if you wish, you've got your PA on the 4 hour chart (so we have weekly swing low, weekly momentum, retrace, daily up, 4 hour momentum) now you drop to the 15 minute to time your entry. What are you trading now? 15 minute TF? 4hr timeframe? Weekly timeframe? Of course it's not strctly necc. to do that after you've positioned yourself in the market, if you really are going to hold for weeks there's not much advantage in dropping down to the 15 minute TF for entry, also you CAN just start chucking limits out until you hook a plaice and get a better price than if waiting for a 4 hour bar etc but by doing that you don't know if a level is holding or not at THIS point in time - waiting for the bar shows you if there's any buying there or not.
So, you've made your entry.: Weekly level, daily direction, 4 hour timing. Now, how long are you going to hold for? After price has risen , where is price likely to pull back from? Where are you targetting? Now, potentially you could hold this trade for weeks, that's one way of doing it. The other is to look for where price is likely to pull back from, target those areas and exit there, re-entering on pullback until the move is done, this is how you can, if all goes well of course, pull, say, 400 pips out of a 250 pip move. Another way might be to position manage, adding and subtracting positions based on these price levels, lightning after momentum, adding on retraces and continuing to trade long until you see a reason on the weekly to no longer be trading long.
'I'm trading the 4hr TF trend you say' No, you're not trading ANY timeframe I say. I say you're trading weekly and daily price levels using the higher TF charts to gauge momentum/market speed and price bars from lower TF charts as your entry trigger.
