A Comment On Intraday Charts
- Thread starter OldTrader
- Start date
I would assume that the charts one uses is directly proportional to the timeframe they trade in.
Personally I find using a 5 min chart better suits my personality. I like small stops, and rapid gratification. I also find that I get the benefit of compounding $ from day to day, greatly increasing my monthly returns.
Now that I trade I consistent # of contracts, I use the profits to build equity for hedged positions in another account.
I am not aware of any longer term traders averaging well over 100% a month return. I'm not sure it can be done trading the daily or even longer term charts.
Personally I find using a 5 min chart better suits my personality. I like small stops, and rapid gratification. I also find that I get the benefit of compounding $ from day to day, greatly increasing my monthly returns.
Now that I trade I consistent # of contracts, I use the profits to build equity for hedged positions in another account.
I am not aware of any longer term traders averaging well over 100% a month return. I'm not sure it can be done trading the daily or even longer term charts.
It can be... given the lower opportunity factor (number of trades) of the longer-term players, they will be forced to take % risks which intraday players may regard as crazy e.g. a 2% risk on the intraday timeframe may be regarded as crazy, but from a swingtrading/position trading perspective it may be a necessity... the interaction of opportunity factor and % risk across different timeframes can lead to broadly similar outcomes, potentially mitigating any compounding advantages on the lower timeframes...
Having made the argument for potential performance parity between the intraday and longer-term horizons, it is not within my psychological make-up to focus on the longer-term plays, since where I lack control (re: adverse overnight gaps), I feel uncomfortable... hence my focus on the intraday time horizon with trades carried overnight only very infrequently...
Again, I trade intraday. I just don't use an intraday chart. I am willing to hold a position overnight if in my estimation it will trade in my direction the following day. I make my decisions based on the factors mentioned in prior posts rather than 5 minute charts.
By the way, 100% return per month compounded takes you from $2K to over $1MM in less than a year. Not many who can do that.
OldTrader
Thanks for bringing that up... I had misread his post as 100% per year, when I was replying to him...
So you are looking at the same data, just not a graphical representation of it. My trading brain works better visually.
That's more or less correct. I look at the same data as one would with an intraday chart. But not the graphical representation of it. What I look at instead however are things like tick, trin, A/D line, VIX, sectors, and key stocks. Further, I pay attention to market reaction to news. And finally I analyze the daily chart for key points, support and resistance areas, etc.
Let's say for instance that you happen to see a head and shoulders top on a 1 minute chart. I won't see that. What I might see though is a market that is clearly up in key sectors and stocks, A/D is positive, perhaps the trin is low. So when your neckline breaks, and everything looks bearish to you, the ticks hit a -500 or so, that's going to look like an opportunity to me.
If I happen to be right in my judgement, that market is going to turn, cross back over your neckline, forcing some of you to cover your position, and then join me on the long side as it comes out the top of the pattern.
Just an example of course...but I've seen this scenario play out over and over again. Where the intraday charts lead you to draw an incorrect conclusion, which later gives the market power in the opposite direction.
OldTrader
First off, its good to see OldTrader back. His posts are always articulate and informative and the discussion is great.
I understand both his argument, as well as the rebuttal by a few of the other traders. The daily reduces the "noise" to some extent and identifies good trade "location" whereby he might be seeing strength or weakness on the intermediate term,which appears just the opposite on the short term.
I have always found that the longer the time frame that I "key" off of the less chance I might emotionally react to a short term "blip". The blips are obviously the bread and butter of micro traders, but they are most definitely the liquidity for the macro players. So, in that respect, if OldTrader identifies the trends and the good entry/exit location, I think he has a better chance of staying committed to the trade by just following the daily chart and ignoring the micro charts...
Thats just my interpretation...
I understand both his argument, as well as the rebuttal by a few of the other traders. The daily reduces the "noise" to some extent and identifies good trade "location" whereby he might be seeing strength or weakness on the intermediate term,which appears just the opposite on the short term.
I have always found that the longer the time frame that I "key" off of the less chance I might emotionally react to a short term "blip". The blips are obviously the bread and butter of micro traders, but they are most definitely the liquidity for the macro players. So, in that respect, if OldTrader identifies the trends and the good entry/exit location, I think he has a better chance of staying committed to the trade by just following the daily chart and ignoring the micro charts...
Thats just my interpretation...
Now I see, you are talking about the use of intraday chart patterns. Different from the use of intraday charts.
To look at it another way, you could trade your method by looking at an intraday chart of the same data you normally look at...