Hi all,
I have some years of experience in investing in stocks; a couple of years ago I started to explore the more speculative swing and daytrade.
Quite recently the tech support of 2 of my charts providers and brokers started to explain me to stay away from short timeframes 1/5 minutes and focus on moderately longer charts, in particular the 12h.
( Of course I'm aware about the dangers of daytrades, common sense wise)
The argument is that high frequency institutional trading can affect way less the 12h timeframe.
Of course, there are also day / weekly and 8h charts, but these guys keep on pushing the 12h.
The other argument is that 12h doesn't get affected by daily / weekend gaps, I'm quoting the explanation:
" so the 12H lets you know hey i’m getting to the 11:59am once that closes that give me a strong indication that I need to be net short or net long for the next hour or 2, and very likely within few minutes you will have you 10 cents gain and you'll be out. If you thought trading was about taking home 1k or 300 a day I think your setting yourself up for failure and false expectations, trading is about small gains over long course of time.
12 H chart divides so trader can see if after 11:59am you running up into resistance or falling into support after 12pm etc "
Whilst I grasp the concept, what I don't get is that after the -after market -the candles don't move anymore, and the following day , during the pre market, anything can happen and it's still beyond our control.
So I 'm not sure how the 12h candles would help to see the price action clear from gaps.
I tried to look for online knowledge on 12h charts applied to stocks but I haven't found anything, just general definition.
Any input is welcome, thank you!
Alex
If we talking about USA, then the session here is from 9:30 to 16:00, which makes it just 390 minutes. Those 390 minutes - just a one bar on the daily chart ( If the bar starts on the open and closes on the close of the session).
If you want half-a-day chart it should be not the 12-hours, but the 195-minutes chart, 1/3 of a day - 130-min. chart, etc....
Those guys just want you to stay afloat a little longer since the longer you stay the more trades you will be able to do and the more commissions and fees you will generate for them from those trades. Otherwise if you loose fast - all your money will go to the market ...
If it would be the Forex broker, then the story would be quite opposite - everything you loose goes directly into the broker's pocket. And the faster you will loose the faster he will get your money..., those guys would then be recommending you to use 1-min charts, for obvious reasons . ...
( Of course I'm aware about the dangers of daytrades, common sense wise
like your broker I am not sure about that ...
your broker sensed that you are a novice, and I agree with him
so regardless of what charts u use, play safe - do not trade real money
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