Put these in order from the easiest time frame to make money to the most difficult. 1 minute bars 5 minute bars 15 minute bars 30 minute bars daily minute bars
The better question is what is YOUR risk(tolerance). The shorter the time frame the quicker (and usually more frequent) the result, win or lose, with (hopefully) minimized risk, thereby potentially limited gains. The longer the time frame, the less frequent the results, win or lose, with quantifiably more risk (usually), thereby more potential for gains. Nothing, other than risk, prevents a trader from entering based off of a tick chart and exiting based off of a monthly. Or visa-versa. To each their own. Yet another grope for the grail?? Osorico
I do appreciate you advice however you could say that risk tolerance is max drawdowns. Max drawdowns are directly related to how profit a system is. Sure you would think that a 5 minute bar strategy, has a lower max drawdown compared to a daily bar strategy, however if the daily bar strategy is much more profitable vs the 5 minute bar strategy, the max drawdowns will be more on the 5 minute bars. Hence, you cannot make the relationship of risk tolerance IF there is a relationship between easyness to beat among the time bars. As to my question...I don't see why it is so hard to answer, I'm quite certain on the answer, however I was hoping to faciliate a group discussion.
WRONG! Max drawdown IS NOT by default, related to the profitability of a system. Do not confuse W/L ratio with profitability. And your compare of a daily bar strategy vs a 5m bar strategy... WRONG! When has a 5m bar had a larger range then a daily bar? Answer, NEVER. So how can a 5m strategy have higher drawdown? YOU can not make the relationship to risk because you assume one timeframe wins consistently and one timeframe loses consistently. If you don't believe me, ask a scalper. No wait, ask a swing-trader. Oops, my bad, ask a position trader. Osorico
Different people use different time frames. Each trader thinks that his chosen principal time frame is the "best" one for his manner of trading, otherwise he would be using another time frame. And, of course, every trader has a plausible reason for his own choice.
Not sure you understood what I read. Say daily bars are very easy to trade and you get a win rate of 85% let's just say winners and = to loser, and say you also trade the 5 minute bars with a win rate of 51%. You will have bigger swings on the 5 minute bars. Yes I realize that the range of a daily bar is greater, however you must note that you can go on a long string of losing sessions. You must also note, the account size needed is NOT related to the range of a particular bar it is the MAX DRAWDOWN of your strategy. Generally with bigger ranges your max drawdown will increase, however if one certain bar is easier to trade vs the other then it would swing whichever way. "" So when you talk about risk, it would make more sense to talk about max drawdown rather than individual trades."" Also, I don't know why it is so hard to answer the question. I posted the question because I was reading something that said that it is much easier to define the trend long term. Hence I was thinking that it might be easier to trade off the daily bars.
Ill answer. No grail here, sorry... 1) I trade futures, not stocks 2) My trading style is micro to mini-holds. Between scalp and swing. Always flat eod. I trade off 2m and 15m. Daily provides for overall direction picture (not necessarily trend). Good trading to you, Osorico