My primary tools for looking for manual/semi-auto stock trades have always consisted of 3 linked charts. A 1 minute, a 5 minute, and a daily. Sometimes I'll punch a 15 minute in there for a longer perspective, but not very often. And then I would/will often use the one minute chart for entry, and then use a combo of the 1 and five to get me out. I think I have always thought there was some type of advantage to using such a short time frame. Those possible "advantages" being a perceived notion of tighter risk control, in addition to seeing many more trades on a 1 minute chart. I am somewhat of a believer in fractals, and I subsequently believe certain behavior occurs across all time frames, so I always thought a one minute chart would mean "more is better". Even as I type this, I am beginning to realize more and more what a ridiculous idea that is, especially since the proof has been in the pudding lately as I am trying to completely get rid of one minute charts on my screens, and have been basing almost everything on simple 5 minute charts. Hell, I even used a 30 minute chart to help me let my profits run the other day. Not only because I am developing more patience as i get older (45 in July), but the risk/ reward is better, the slippage isn't as important, and although my commissions are already negligible, they matter less and less now. But the point of the thread is thus: Following 1 minute charts, and all of the 1 minute alerts my scanner picks up is just getting to be too f...ing exhausting. By lengthening my time frame, it just seems more relaxing. Not only because of the advantages listed above, but because of not being driven insane by the perception of so many missed opportunities, especially early in the day when alerts and patterns and such are flying at you at light speed. Many years ago, late 90's I think, I paid Mark Douglas to talk to me on the phone for an hour, and he basically talked about what is in his books. But one thing I specifically remember is him asking me what time frames I look at. I told him I primarily looked at 1 minute entries. He asked if I was insane, and I remember responding, "probably". Then he went on a rant as to how one minute charts are just noise, and how I am shooting myself in the foot by using them. I guess I had to learn that one the hard way over time. Well this is way longer than I thought it would be, but I guess it's my way of standing up in a large room and saying, "Hi, my name is jnbadger, and I am a one minute chartaholic. In 24 hours, I will have been looking at time frames of no less than 5 minutes for one day." (Please keep in mind, I trade the crazy movers during the day. When I put on the occasional index trade, it is based on a 15 minute chart, so this rant does not apply to the /ES, SPY, or any other type of index trading.) Thank you for your time.
LMAO! You know what they say at those scalper's meetings: "Five minutes at a time." J, although I, too, am a 1-min chartaholic, I've learned to make sure ANYTHING I contemplate on the 1-min chart is in confluence with an ACTUAL SETUP on the 5-min chart.
If your going to move from 1 minute to 5, you might as well keep going higher. To me 5 minute charts don't offer as much action (obviously) which can leave you sitting around for quite awhile everyday. Yet you have to sit there to catch the setup. Might get a little boring for you. Just a thought.
Congratulations and Thanks for taking the time to do this experiment on 2 separate accounts and verify the results for yourself and others! Many questions in trading are hard to solve - like which vehicle to trade, what timeframe etc. But on closure analysis, its possible to prove both theoretically and practically that trading 1 min is much harder than trading 5 min. Bighog has proven it practically by setting up 2 different accounts and doing it. Theoretically, even if counter argument is that markets are fractal in nature so trading at 1 min should be equivalent to trading at 5 min. Its a wrong inference. FACT is trading commissions and bid-ask spread are not fractal. With 1 min chart, commissions and bid-ask spread as a % of your "average trade profit" will have a much bigger part than if you are trading using 5 min. Trading 1 minute trying to overcome bid-ask is best left to the bots. Its just not worth it - both in terms of money made, as well as it has a pretty bad effect on your "long term health". Disclosure: I use 1 min chart - but just for looking at volume, not for making trading decisions, not at all! If I have to train some one (lets say my younger sibling or my gf) to trade, I would start them off daily and 4 hrs chart. I won't let them go to 1 hr chart for first 6 months.
Like the answer to a lot of questions on ET it depends. It depends on what kind of trades you are doing, what you are trading, and size. You will have a problem if you switch. You have already conditioned yourself to follow a 1 min chart. If you switch and then take a hit, in the back of your mind you will have this nag that I should have been doing 1 min. 45 old - please Truth - if you are asking this question now you shouldn't be doing trades where min to min makes a difference.
I disagree that it will be much of a problem, as I have already been fortunate enough to have much better success with the longer time frames. I thought I covered that in my post. "45 old - please" Meaning what? Too young to bitch about age? Possibly. "Truth - if you are asking this question now you shouldn't be doing trades where min to min makes a difference." - Hence the change. My point is that I have some excellent habits which work, and some bad ones which I am weaning myself off of. I think my personality just doesn't fit with lightening fast trading unless I'm using automation, which I use every single morning. My API will do more trading in the first 5 minutes than I will do the entire rest of the day. I'm a patient, laid back person, and I need the longer term charts. Yes, to me, 5 min is longer term. It's almost like everything is moving in slow motion compared to what I'm used to. I just needed to realize boredom is ok, and it's fine to miss the minute by minute setups, which, as pointed out in someone else's post, have an inferior expected return anyway. (For me, that is. It obviously depends on the strategy)
I don't even remember when I was 45yo, LOL. I use 1/3M, 60M, daily, weekly,etc.. I only use the one minute for first 30 minutes for signals, to me it doesn't matter whether it is opposite trend of the three minute as I can reverse into a different signal. But after the 30 minutes, I only use the one minute to help in exits. Way too hard on the eyes to trade tiny timeframes for me in stocks any more, rather take the Dow 30 using 60 minute charts before mid day for entries. But I have used 20 second charts when trading high flyers in $300 plus range to shorten the risk. Yes, the boredom is toughest part of trading after this becomes like a job. Then before you know it... http://www.youtube.com/watch?v=j4kRQzZqSlI&feature=related