I was just curious how and if other traders incorporate different time frames into their trade decisions. I mostly do intraday swing trading with the es contract. I mostly base my decisions on the MA's and indicators with 3 minute bars, but I use the 2 and 5 minute bars for possible upcoming entry and exit points. I've heard that if you enter a trade on one time frame that your exit criteria should also be based on your trading rules in the same time frame. How do other traders use multiple time frames to make their trading decisions? Is it helpful or does it just create more ambiguity in the trading process? Thanks for the insight. Jeff.
I believe that multiple time frames are extremely important to a swing trader. Viewing multi time frames allows you to see the trends within each time frame and see how the longer time frames are influencing the one that you are focusing on. Most of the time the longer timeframe is the ruling force. Would you really want to surf a small wave onto shore when the tide is on its way out? You could but it requires more effort. (FYI, I am not a surfer) When approached properly, this is one of the best methods out there. This of course is just my opinion.
I think scaling time frames is very useful in creating a type of "map of the markets". It helps determine stronger pivot points, levels and overall trend direction. From that you can scale down to a "trigger" time frame and find the optimal entries and exits... While I believe, in theory, one should probably keep the exits and entries pretty consistent on whatever time frame they are taking trades from, in reality, it is probably best to find some intermediate levels to scale out of or partial off pieces...There is some pretty interesting work on this subject and some decent software out there to try and automate portions of this process
I feel the same way. If I'm long in a position I'll add more after a pullback fails to break or slightly penetrates the MA on the smaller time frames and then continues the upward trend. The smaller time frames tend to give more opportunities to scale into positions at lower risk points. What time frames do traders rely upon? Does the one minute chart on the ES contract, for example, provide enough information to make a trading decision? Thanks, Jeff.
I like to look at my activity as breaking down into trades and entries. What I mean is that for example if I see a bullflag forming on a 30 minute chart, I know that I want to be getting long, but I may not have a great place yet. I will then go down to a small timeframe (5,2,1 minute) and look for a reversal patterns. So, bigger picture continuation, smaller picture reversal. Brandon