time frame

Discussion in 'Technical Analysis' started by weld1, Jun 26, 2003.

  1. weld1


    i know this is a dumb question, but i don't think i have a good grip on that time frame thing(as well as alot of other stuff) without to much ridicule,and laughter can someone give me the jest of it please. thanks, weld1
  2. amg

    amg Guest

    "Time Frame" is short hand for specifying how long the data bar is in the chart you use to trade.

    So, a "Daily Time Frame" is a Daily Chart, a chart in which one bar of data is equal to one day.

    A 15-minute time frame is a chart that has one-bar equal to 15-minutes (15m).

    A 1-minute time frame is a chart that has one bar equal to 1-minute.

    Now, people will say to take the trend off a higher time frame or use a lower time frame to enter or exit a trade.

    This means if your bread and butter trading is swing trades on a "Daily Time Frame", you probably do your TA on a daily chart, but select which stocks/indices to consider by first looking at Weekly charts, that is, use a "Weekly Time Frame" to select the trend. This idea is covered extensively in Alexander Elders "Trading for a Living" book.

    Once your Daily support/resistance, or whatever, are determined and you are ready to trade, you then go to a lower time frame, for example, a "60-minute Time Frame" to select your entry and/or exit.

    You can do the same things with intraday trading by looking at 15m - 5m - 3m charts: 15m chart for trend, 5m chart for support/resistance, etc, 3m chart for entry/exit. Or 60m-15m-3m... the idea being to use three time frames to get an edge on gains.

    I'm not saying this is my system, or any system, but that's generally how time frames are used.

    Ana Maria
  3. An important observation is that techniques that work well in one itme frame, do not necessarily work in another. For example, trading a moving average works all right if it's at least a few days long, but I have never seen, say, an hour long moving average work as something to trade by itself. I have also seen that candlestick patterns that work well on the 10 or 15 minute charts are much less reliable on the 1 or 3 minute charts.
  4. Two comments:

    1. Use the right spacing between time frames.

    2. tune your indicators so their signals work optimally on all selected time frames.

    Getting to this point is not easy. When you do you will seriously impact your bottom line in two ways:

    1. You will find you most efficient personal connection with the market for making money. staying ahead of the beat is a main failure of most people in ET. They are usually "overtraders".

    2. You will find a better market potential yield pace of operations. Pace varies but it will be on the time frame to see.


    Additionally, the general trend of the larger timeframe may be an indicator as to the validity or longevity of a setup in the smaller timeframe.

    ie Head and shoulders top with a bearish tilt of the neckline may not be as bearish as you think, if a solid uptrend exists on the larger timeframe.