Hi all, I have some years of experience in investing in stocks; a couple of years ago I started to explore the more speculative swing and daytrade. Quite recently the tech support of 2 of my charts providers and brokers started to explain me to stay away from short timeframes 1/5 minutes and focus on moderately longer charts, in particular the 12h. ( Of course I'm aware about the dangers of daytrades, common sense wise ) The argument is that high frequency institutional trading can affect way less the 12h timeframe. Of course, there are also day / weekly and 8h charts, but these guys keep on pushing the 12h. The other argument is that 12h doesn't get affected by daily / weekend gaps, I'm quoting the explanation: " so the 12H lets you know hey i’m getting to the 11:59am once that closes that give me a strong indication that I need to be net short or net long for the next hour or 2, and very likely within few minutes you will have you 10 cents gain and you'll be out. If you thought trading was about taking home 1k or 300 a day I think your setting yourself up for failure and false expectations, trading is about small gains over long course of time. 12 H chart divides so trader can see if after 11:59am you running up into resistance or falling into support after 12pm etc " Whilst I grasp the concept, what I don't get is that after the -after market -the candles don't move anymore, and the following day , during the pre market, anything can happen and it's still beyond our control. So I 'm not sure how the 12h candles would help to see the price action clear from gaps. I tried to look for online knowledge on 12h charts applied to stocks but I haven't found anything, just general definition. Any input is welcome, thank you! Alex
That advice sounds rather strange to me. What it says it that you should look at the stock price just before lunch time, place your order and hope that you make a profit while everybody else is having lunch.
I don't know about that, I'm trying to get the advantage of 12h timeframe that smooths and solve the daily stock gaps and gives a better picture of the price action
That is not what the advice is telling you. It tells you to look at the price at 11:59AM, base your buy/sell decision on that, and then wait for maximum 2 hours to decide for your next action. It doesn't say anything about "smoothening 12 hours".
For stocks, the point is moot. The trading day is only 6.5 hours. And the significance of gaps between days is relevant for any number of reasons. In something that's continuously traded, I'm skeptical of the value of arbitrary cutoff times. The exception that is probably the opening and closing of linked markets (i.e. SPX options and ES). That's not to say someone couldn't find significance in trading at noon, for example, and comparison of before and after trading. But as a standalone dictate that 12h charts have inherent value, I'm going to throw the bullshit flag (to the extent that I would say the same of 47m period charts, or 3.14h, or 18d...). Conversely, I would say there is inherent value in daily charts because of the gaps. As an aside, I'd be interested to see candles charted on 24 hours basis, but going from noon to noon the following day.
The idea makes no sense to me, either. You might even possibly make more of a case for 8-hour charts (with one bar covering the entire 6.5/7-hour stock-market session) ... but 12 hours, not so much. I can't see anything wrong with those, in principle - if you want to try something "faster than an hour, but not half an hour". There were certainly traders in the 1970's using 9-minute charts in an attempt to identify some patterns unseen by traders of 10-minute charts. Whether it got them anywhere, or not, I have no idea, but it was an idea that had some popularity, long ago, anyway. I can just imagine people arguing about the power of the mystical nature of using a chart periodicity that matches "Pi" to three significant figures. The people who like "Fibonacci levels" might swallow it, anyway. Not to mention believers in the Welles Wilder moon-phase cra ... excuse me, "stuff". Those are easy enough to display, surely? Just use "1-day"bars/candles and set your charting software to end each bar and start the next one at 12.00?
I'm so glad someone got the numerology reference I stuck in there. One would think--but it's not functionality my platform offers...I spent a good 15 mins trying I agree that one could find value in those charts, or any arbitrary number (the day, hour, and minute are all constructs that would be arbitrary if applied anywhere other than earth). What I take exception with is the implication that 12h has value inherent in the chart itself (having read the email in which this claim was made to OP), without providing context for why it's important. Does it line up with George Soros' lunch break??? Lol It's indisputable that longer time frames will cut out market noise, and that's fair advice standing alone. But I don't buy the 12h story absent context.
Only a suggestion, but I've heard of people gettng round that problem by re-setting their computer's internal clock(?). Might cause other problems, though ... Lol, I'm with you there, anyway.