Time Frames

Discussion in 'Strategy Development' started by hollanders, Aug 18, 2008.

  1. How do different time frames work together using MACD & STOCH.I was useing 5 min. chart & was told to go to 30 min . I see that the indicators do not work in unison, sometimes MACD over zero line in 1 time period , while under in other. Can they be used together for entry points. Same with STOCH.
    Any help appreciated!!
     
  2. one time when i was only doing day trades... using 5 min chart, i employed a strategy where i would only buy if the 2min, 5min, 15min, and 60min stoch & macd triggered an entry to the long side.....simultaneously.

    was usually good for 1or 2 trades per day.....

    i called it the "elevator effect" where it was like riding an elevator up...inside another elevator going up...... and inside yet another going up.... I wrestled with this concept many times..... how can it fail???? Many square pegs got bent from being forced into round holes in my dissemination of this strategy. Finally a few cables snapped... i got knocked silly, and came to my senses. :cool:
     
  3. Wood474

    Wood474

    I'm more of a longer timeframe trader, but what you want to do is get two timeframes. Look like in your case maybe a 5 min and a 30 min. Use the longer timeframe, i.e. the 30 min as your anchor/reference chart to determine the current 'longterm' trend you're looking at. MACD is theoretically a trend indicator whereas stochs and RSI are oscillators. Put the MACD on the 30 min chart, and as a rough plan, aim to trade only in the direction of the overriding trend, i.e. in the direction of MACD momentum. Use your 5 minute chart to take your signals on, so put the stochs on the 5 min. If the 30 min MACD is in a downtrend, you wait for the 5 min stochs to go near or into overbought extremes and then look for a short entry to get back in with the longer term trend.

    That is a rough plan you can work with. That way, when you get the conflicting signals it's all good. MACD 30 min in a down trend and 5 min overbought. If 5 min is oversold, then you should be cautious about jumping on board the move as it maybe ripe for a retracement where you'd want to get in. Depends on your experience etc.

    Also look for divergences. MACD 30 min in a downtrend, bearish divergence on the 5 min, big signal. Divergence on the 30 min MACD, the be cautious about jumping in until the divergence has played out or been unwound.

    Good luck - hope anything here has helped.