Does TA work better or worse on lower or higher time frames?

Discussion in 'Technical Analysis' started by iamnewuser911, Nov 9, 2017.

  1. Are algo trading based of TA? If so it should work better on 1/5 minute or even seconds charts. If not will it work worse? (Worse stats compared to higher time frame trading)

    Or does TA not work as well on time frames like weekly monthly daily etc? Because of fundamentals taking over?
  2. Xela


    No. :)

    Charts of most markets are more or less fractal, most of the time, and for that reason most TA works equally on charts of higher/lower time-frames.

    That's not to say that one's results from using it "equally" on different time-frames will necessarily be equal, of course.

    There are (are least) two "key issues" involved in the context of your question that are quite widely misunderstood and often not well thought through.

    The first is the idea of "noise": many people will tell you that TA is more "reliable" on higher time-frames because there's "less noise". This isn't really correct (though we all know more or less what people mean, when they say that) and strictly speaking there's no such thing as "noise", per se: a tick is a tick, and a unit of volume is a unit of volume, and if it's there on a chart, it was transacted.

    The second is the fairly widespread (and certainly misguided) assumption that higher reliability (i.e., in this context, a higher win-rate) is necessarily going to equate to more overall profit. The point some are overlooking here is that it's typically both financially better and less risky, in the long run, other things being equal, to make an average of 6 pips/ticks an average of 4 times per day than it is to make an average of 12 pips/ticks once a day - even if the win-rate of the former is lower than that of the latter. In other words, trading-frequency is a relevant parameter, too, and the relationship between that and reliability is typically a non-linear one.

    Yes; but that's not to say that they're necessarily based on indicators, of course. There are aspects of "TA" that have nothing to do with indicators at all.

    I hear you, and there's truth in what you say, but it's not always as simple as that.

    I wouldn't say "taking over", necessarily, but their relative significance is clearly increased over long time-frames, yes.

    Price Chart TA works in ALL TIME FRAMES AND IN ALL MARKETS! It shows what players are actually DOING with their money. THAT'S what we traders need to understand and "get in tune with" as best we can.
    Money Trust and Xela like this.
  4. Could you elaborate why "That's not to say that one's results from using it "equally" on different time-frames will necessarily be equal, of course.", what causes the discrepancies between time frames where the exact same TA system is applied? Spreads, slippage. My question is why is there more noise? Where is it from and why is there more false signals? What causes these? What sets these up? Since the exact same pattern on let's say a daily chart and a 1 minute chart, should it move the same way most of the time when that pattern happens?
  5. Suggest you get a handle on K.I.S.S. You appear to making it "complicated enough" to hose your efforts.
  6. I am currently trading on higher time frames but when I run it through lower time frames like 5 minute, it has results significantly differing from what I gathered on higher time frames. Just curious why :D
  7. Sounds like you might not be using proper buffers. That is, perhaps using on a 5-min chart what you might on a longer term one. Whatever time frame your chart... it stands alone... with its own buffers/stops/reversal... independent of longer time frames.

    Shorter duration charts will have more signals, but smaller moves.
    iamnewuser911 likes this.
  8. johnnyrock


    I "think" TA works better on higher time frames, because you can get a picture if how the fundamentals have moved the stock.

    TA can be used at inflection points, key areas, to see if the stock is acting properly. Then it is up to the trader to decide how he will play the break (fades included).
    comagnum likes this.
  9. 1. Price chart TA works the same on ALL time frames. Each time frame has its own parameters.

    2. You should only care about fundies as they are reflected in the charts. IOW... FORGET ABOUT FUNDAMENTALS if you're a trader. Get your money "in tune" with what the players are doing and forget everything else.

    Trading has a "psychological hurdle". We traders, concerned about being wrong and losing money, seek the comfort of "understanding the (fundamental) reason why" we should go on the risk. Unfortunately, we don't get to know that in time (if ever) to do us any good. Accept this!! Become a disciplined chart trader. Your "reason" to go on the risk is because "_____________", as dictated by the chart. If there is a fundamental reason for a move, you may/may not find out later. In any event, it will be too late to do you any good.
    Last edited: Nov 9, 2017
  10. toc


    In day trading higher the number of trades you take the higher the operational variables kick in against you.

    In position trade, you have to deal with higher stop loss levels plus overnight surprises (not to say surprises happen even during the day).

    Does TA work better on either time frame? do not know but it can also depend on the security and market environemnt you are dealing with. Ex: markets are strongly trending, hence major stocks would/might trend with it and thus you can have indicators on a flat horizontal run at a overbought or oversold levels i.e. no reversal in sight and a newbie would conclude that TA indicators do not work.
    #10     Nov 9, 2017
    Xela likes this.