To clarify, I don't use the daily chart per se for intraday trading. In fact, I have no chart on my monitor. I analyze the chart to determine 'points' that may be of interest IF the market happens to trade to that particular level.
Some of those points might be things like:
1. Yesterdays high and low.
2. Major moving averages ie 10, 20, 50, 200 day averages.
3. Swing highs and/or lows that are nearby
4. Trendlines
5. Direction of trend
You get the idea. Any point of significance I have in my notes that I refer to.
What I have on my monitor instead of an intraday or daily chart though are large numbers of sectors, key stocks, and things like tick, trin, A/D line, etc.
There is little doubt though that the vast majority of intraday traders are using intraday charts in some manner. I am simply questioning the value of those charts. My belief is that these charts give the trader a sense of security, a way to feel that he has a means of setting a close stop, etc etc. My contention though is that the use of these charts chops out a decent portion of the day simply in recognition of the beginning and end of trends. I contend that the stock market moves based on what it's underlying components are doing, which later reflects in the chart. And if a move of importance is going to take place, it will reflect in the underlying key stocks and sectors, the trin and tick, and probably begin from an important spot on the daily chart.
To watch the market in the manner I'm describing will require a thought process as opposed to a 'blackbox' theory. But let's face it....if one of your tactics is to buy pullbacks in a intraday uptrend, how difficult do you really believe that is without the benefit of the intraday chart? If you're using intraday charts to buy strength sell weakness, how hard is that to do without the chart?
When you're seeing what appears to a 'major' breakout on a 5 minute chart, what it may really amount to on the daily chart is moving to a new high over yesterday!
When the market comes down a number of days to the 960 level, an important swing level on the daily charts, do you need that intraday chart to understand we 'might' bounce from there?
I read on here a periodically comments from people regarding how difficult the market is. Do you suppose that the reason that is has anything to do with the method used to trade it? Food for thought. When WMT gaps up, creating an underlying tone of strength in the market, there's a good chances that the market is not going to go down, regardless of what the 5 minute chart may say. If you're only looking at the 5 minute chart, you're going to be simply chasing the chart around with no understanding of what's happening underneathe the market. That technique has plenty of room to work when the days are 20+ points in range. It becomes more problematic though when the days are half that in range.
AGain, food for thought. If whatever you're doing now is working like a charm, continue it. But you might pause to consider the idea that when everyone is doing one type of thing, it might be a good idea to at least question it.
OldTrader
