What I have been settling down with lately is the 3hr chart for the Euro(6E). I look at the daily for the big picture, 3hr for my areas of interest, TL's, and SR levels, and then enter on 30min chart. Since going to a bigger timeframes, I feel I'm whipsawed less ,can see things more clearly, and stress level has decreased. Any levels on the daily can transfer to 3hr, and any levels from 3 hr transfer to 30 min.
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sense Xav. Do you find when you do have a draw down that it is precipitously bigger than on a shorter minute chart? Is it more difficult to look at a bigger draw down or a smaller realized loss from the whip?
It took a couple weeks to get used to the bigger hits, but for me, as an example, I realized I take (3) 15-tick stops more often than one 40 tick stop. I am just a beginner though, so this might be different for you. For me, with bigger timeframes I can work with "zones" instead of numbers. Even taking ridiculous hits(150 ticks) that I should not allow myself to take, I am doing better than I was aiming for smaller targets with tighter stops. A huge factor was also the stress level. I am working on an alert system that sends me emails when price gets close to levels I'm watching. No need to be in front of a chart unless its somewhere interesting. You can always start off small, and scale in as well. With bigger charts you have plenty of time to analyze and make decisions.
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This is a great question, and a very important thing for folks to think about. I've personally spent hours and hours thinking about the concept of time series, what is logical, what works for me, so I'll share a few of my thoughts.
Firstly, I think that the idea of "time frame" is often miss-communicated, in my eyes, time frame is the window that you are trying to forecast in. For me, this would be day, week, and month.
With an idea of the time frame I am trying to trade in, (forecast out), I start to think about how much data or information do I need to build a trading hypothesis. For me this is about 3 to 10 times the amount of data I'm trying to forecast.
Finally after that I would move down to data aggregation, or time series. which is largely a personal question. One thing to keep in mind is that with time series (time based aggregation), small increments seem to become a little arbitrary as they become more susceptible to the noise, which I think makes it a less reliable way to parse data, but that's just my opinion.
Here is an example of one of my charts, it contains nearly a month of trading, in 2 tick increments. But I use the bottom half of the chart to take all that data and rearrange it in daily, weekly, and monthly increments.
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Regardless of the way we choose to sort our information, the market will move up down or sideways, until it doesn't. Larger series may require more assumptions and larger lumps or risk, while more granular series will provide you more raw information, at the cost of clarity. Somewhere in between you may find a balance of risk and accurate forecasting.
"If I agreed with you, we'd both be wrong."
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I mainly trade congested or ranging areas on the 5 minute chart. I'll always eyeball the hourly and daily charts just to get a feel for things. Intra-bar trading works best on the 5 minute in my opinion because I believe a lot of traders and algorithms use bar time for entry strategies. I can filter my entries based on bar time to gauge the likelihood of a continuation or retracement based on the size of the candle to previous candles/wicks. If I were a trend trader I would choose a larger time frame.
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well, that also depends on what kind of instrument you are trading.
I trade daily forex binaries only.
I enter my trade(s) for the day (if I decide it is a good day for trading) somewhere in the morning, between 9:00 and 11:00 a.m. EST on options ending at 3 p.m.
In my analysis if/what to trade, I look at the 5 minutes, 15 minutes, hourly, and daily indicators and charts.
If they all line up and agree on a direction for specific currency pairs, I open a trade in the appropriate direction and set up a working order to close at my target profit.
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