Discussion in 'Technical Analysis' started by sukhen, Dec 20, 2003.
Why do we need many time frames? How does it help?
it helps you determine the strength of the trend. a 15 min trend is more powerful but slower to react than a 1 min trend.
It helps by condensing price and time information.
In any given time, there is multiple support and resistance areas. You can see them all on a 1 min. chart, but it can be much easier to see the S/R areas, which are further apart from each other, on a 5min.- 15 min. chart, and so on.
What may look like a stock (or e mini, or ETF) getting crushed or very weak, may be nothing more than a pullback on a higher time frame.
1) a 20 minute down trend on a 3 minute chart may be a 4 - 6 bar pull back (to support) in a 15 minute up trend
you get the idea, you can extrapolate on many time frames. This is why many newbies buy tops and short bottoms, they only look at one time frame.
Hope this helps.
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PM if you have Q's about the software.
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How can you not be aware of multiple time frames? If you follow the market even a little you must be aware of the daily trend. If you watch it daily then youre aware of the 60 and 15 min time frames approximately. If you are not aware of any of these then you have no business trading.
your the only one I know of who was born with all his knowlege.
For the rest of us, God made us our own little symbol. It looks like this ( ?)
Probably one of the most basic rules ever is to generally not trade against the trend of the next larger window(s).
For a swing trader that usually requires looking at hour-day-week time frames.
Day people will obviously use smaller frames.
I agree with easyrider - you should not be "trading" if you don't completely understand the concept. You may find that you don't need to follow it religiously, but you must understand it, otherwise you will not be evaluating risk.
Im not a know-it-all. Far from it. But this question is pretty naive. How can you trade without being aware of the different time frames and their interconnection? I trade off a 1 minute chart but I know , going in, whats been going on the last few days, the last few hours and the last few minutes. Is this going to influence my next trade? Duh.
You don't multiple timeframe charts (personally I don't like them), but you DO need to look at the price action in more than one timeframe - 5 and 60 minute charts usually for me.
Also, if you're trading indices, it's also important to look at the price action relative to support/resistance between the various linked symbols (e.g., SPX, SPY, and ES).
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