First, let me say that I am aware that most of you are using intraday charts, along with a variety of indicators. This post is not intended to tell you "not" to use your intraday charts, but to point out a few disadvantages.
Next, let me also say that I spend alot of time analyzing charts on many of the indexes and numerous stocks. However, I spend my time looking at the daily charts, normally not the intraday charts.
Let me explain why that is. The typical day these days might for instance be a 10-15 point day in the ES. But this range is not put in in a straightforward way. Rather, it's a combination of several points in one direction, a few the other direction, back and forth, up and down, until the days range is put in.
If you're one who uses intraday charts and the day at hand is one which will ultimately be 10 points, and it takes you 2.5 points to recognize the trend, another 2.5 points recognizing that the trend is ending, that only leaves 5 points. And again, this is not going to be achieved in a straightline at that.
So instead, what many do is set a target of a couple of points so that they can eliminate some of the problems set forth above. This then leaves them behind when the market makes a big move in one direction.
I don't use intraday charts. Rather, I watch large numbers of indexes and stocks to get a feel for direction. Some of the things I watch include tick, trin, the A/D line, bonds, gold, and then various stocks and indexes. The idea here is to watch enough things to get a feel for direction.
I'm also a big fan of watching the markets reaction to news events. This reaction can serve as a better indicator than most of the indicators out there if used properly.
I also analyze the daily charts on all of the indexes and stocks that I follow. I watch the markets reaction as it nears one of those points, a pivot point so to speak.
My belief is that the index futures, my primary trading vehicle, trade based on the combination of all the underlying stocks, but particularly those which comprise the larger percentages of the indexes. And therefore, these stocks and/or sector indexes give clues as to direction. I believe these clues are more reliable than any of the intraday charts that you may rely on.
An understanding of how the major components of the indexes are trading enables the trader to trade based on the market. Watching an intraday chart creates a possible scenario where the trader is trading the chart rather than the market itself. This is where those false breakouts come from. The intraday chart may well create hesitation or fear at exactly the time when a trade is at hand if you're aware of where the important points in the daily chart lie, and if you're aware of how the underlying components are trading.
Now, I'm not suggesting that you drop the use of intraday charts if you're currently using them. What I am suggesting is that beginning to monitor important sectors and components may aid your use of the intraday charts. And as your confidence builds, you may find it unnecessary to rely so heavily on the intraday charts.
OldTrader
Next, let me also say that I spend alot of time analyzing charts on many of the indexes and numerous stocks. However, I spend my time looking at the daily charts, normally not the intraday charts.
Let me explain why that is. The typical day these days might for instance be a 10-15 point day in the ES. But this range is not put in in a straightforward way. Rather, it's a combination of several points in one direction, a few the other direction, back and forth, up and down, until the days range is put in.
If you're one who uses intraday charts and the day at hand is one which will ultimately be 10 points, and it takes you 2.5 points to recognize the trend, another 2.5 points recognizing that the trend is ending, that only leaves 5 points. And again, this is not going to be achieved in a straightline at that.
So instead, what many do is set a target of a couple of points so that they can eliminate some of the problems set forth above. This then leaves them behind when the market makes a big move in one direction.
I don't use intraday charts. Rather, I watch large numbers of indexes and stocks to get a feel for direction. Some of the things I watch include tick, trin, the A/D line, bonds, gold, and then various stocks and indexes. The idea here is to watch enough things to get a feel for direction.
I'm also a big fan of watching the markets reaction to news events. This reaction can serve as a better indicator than most of the indicators out there if used properly.
I also analyze the daily charts on all of the indexes and stocks that I follow. I watch the markets reaction as it nears one of those points, a pivot point so to speak.
My belief is that the index futures, my primary trading vehicle, trade based on the combination of all the underlying stocks, but particularly those which comprise the larger percentages of the indexes. And therefore, these stocks and/or sector indexes give clues as to direction. I believe these clues are more reliable than any of the intraday charts that you may rely on.
An understanding of how the major components of the indexes are trading enables the trader to trade based on the market. Watching an intraday chart creates a possible scenario where the trader is trading the chart rather than the market itself. This is where those false breakouts come from. The intraday chart may well create hesitation or fear at exactly the time when a trade is at hand if you're aware of where the important points in the daily chart lie, and if you're aware of how the underlying components are trading.
Now, I'm not suggesting that you drop the use of intraday charts if you're currently using them. What I am suggesting is that beginning to monitor important sectors and components may aid your use of the intraday charts. And as your confidence builds, you may find it unnecessary to rely so heavily on the intraday charts.
OldTrader