Multiple timeframes RELATIVE to markets

Discussion in 'Technical Analysis' started by alex.samant, Jan 24, 2008.

  1. This is quite an interesting topic. I was discussing this in a training session and there were several issues that came up.

    Now, the main subject is that matching multiple timeframes by their ratio is not constant across different markets.

    For example, there is the famous "factor of five" that states a normal relationship between time frames would be to multiply each time frame by 5, meaning

    weekly = 5 x daily so you get a weekly/daily time frame combination.

    hourly = 5 x 12 minutes so you get an hourly/12 minutes combo.

    These ones are pretty clear BUT

    IN BETWEEN THEM the nature of the market traded takes its toll:

    With what do you match a daily chart?

    Daily = approx 5 x 4 hour chart

    so you get a daily/4hour combo

    HOWEVER, there are only 8 hours during the day!

    So you basically have a 5:1 realtionship in time but a 2:1 relationship in trading periods.

    Ok, let's try something else then:

    Daily = approx 5 x 2hours

    Now we have a 12:1 relationship in time and an approximately 5:1 relationship in trading periods.

    But what if you were trading a 24 hour market?

    Then you would really have a 12:1 both in time and trading periods.

    I am curious of your opinions on what is the best ratio (if there is one) that would fit a wide range of market types.
  2. Cynthia Kase used daily, hourly and then 20 minutes (1/8 and 1/3rd) Robert Krausz (Fibonacci Trader) was very fond of 1:5 ratio throughout.

  3. on 8 hour or 24 hour markets ?
  4. and again

    there is another issue:

    say we use a 5:1 ratio

    and use the hourly with the 12 minute.


    Let's say we take our trend from the hourly.

    Now, a 20 EMA trend on the hourly is not the same thing as a 8 EMA trend on the hourly.

    A 20 EMA on the 1hour chart is basically a 5EMA on the 4hour chart....

    What i am trying to say is that i believe that

    BY ELIMINATING INDICATORS (therefore the confusion different indicator parameters create) and STICK TO PATTERNS,

    it's EASIER do deduct the ideal relationship between timeframes by looking at them in parallel.
  5. i can't type that well. sore fingers ;)
  6. 8 hour, this info is from before the 24 hour markets
  7. Believing is not the same as reality. Believing is what we do with religion. Believing in the markets makes you go broke.

    This is why you'll need some quantative stuff.
  8. funny, i believe more in the market than in religion.
  9. Then you may want to examine what the word believe stands for. Let's say that believe stands for somethign that does not have any concrete proof.

    With the markets you better make sure you have some form of proof before you put your hard earned money on the line, a wet finger approach is not going to get you very far. You'll need statistical proof of your "chances" that over time you'll make money.

    You may now have the belief that you can make money in the markets. But until you do produce the results it is only belief. Once you make money consistently then it is no longer a belief.
  10. ok. but i was just posting a specific technical analisys issue here.

    i don't recall my belief/wet finger/proof on the line here.

    other than that, thank you for your remarks.
    #10     Jan 24, 2008