Daytrading timeframe question - for experienced and profitable traders only please

A

anglagard

I find that using multiple timeframes for daytrading confuses me as I begin to doubt small trends conflicting with big trends and vice versa.

For instance, a strong trend develops on the 5 minute chart and I notice another trend on the 60 minute chart is approaching what I consider to be resistance. Not to mention the times price just decides to sit under it trying to break it for hours.

Well, sometimes, the 60 minute chart holds it, other times it passes by like thin air, so I asked myself, why bother with multiple timeframes if the support and resistance study that I gather from the other charts might or might not hold.

After this I decided to just trade one timeframe, started with the 5 minute, but truth be told, most of the time is just too noisy and the trends don't last, it's constantly chopping, which is absolutely a killer for my style of trading, which is trend following.

After this I switched to the 60 minute, and well, trends on the 60 minute can encompass so much space, they could be uptrending and a particular day price is downtrending inside of it!

I think you know where I'm going with this, this trading stuff is not easy!

I'm trying to keep it simple but without leaving the boundaries of daytrading which is the style I prefer.

Got to ask, which timeframes do you guys use for daytrading and how do you determine exits ?

If you only use one chart which and why.

If you use multiple, please state how.

Seriously need some guidance on this.

Thank you for your help!
 
hey, i will share my timeframes with the world. makes no difference in my future results, anyways.

I am Day Trader - short + long term !
+
I am a Swing Trader - short + long term !

The timeframe, for entry and exit are different on every situation.
Because the markets are always playing some other trade on another timeframe, and switching all the time to fullfill trades in trades.

I use:
1min
5min
15min
30min
1h
2h
3h
4h
6h
8h
12h
16h
Daily
2 Daily
3 Daily
4 Daily
Weekly
2 Weekly
3 Weekly
Monthly
2 Monthly

Most important after all, are of course the: 1h, 4h, 8h, Daily, Weekly, Monthly !!! But i am sure you knew that before....

Good luck
 
Daytrading using multi-timeframe charts common trend is a joke to confuse novices to contribute$ in a noisy trendless framework.You are looking for diamond in a gold mine. If you Swing trade weekly using 4 hrs, daily and weekly charts in confluence, at least there is a chance of survival/delay total ruin.
Hedge funds, even prop traders, look at lower than 4hrs timeframe charts just for fun. Most daytrading is done by sophiscated automated programs which do not refer to charts but spread discrepancies/anomalies across a vast range of markets simultaneously.Prop traders are there just to monitor in case of algo malfunction,IT issues.
 
First of all determine what kind of trader are you.

Assuming discretional...

Do you trade a specific pattern, perhaps even pattern (s) ? Then you want to search for it/then no matter the timeframe or instrument assuming the instrument is liquid.

However if you choose Price Action, then trading can become quite complex.

Believe it or not the most important chart is the Daily.

From the daily alone you can obtain very important information.

For instance...

Previous high
Previous low
Previous mid point / daily pivot
Potential major areas of support/resistance
Probability of testing daily pivot after an outside or inside open, aka gap or no gap.

Etc etc.

It does not just stop there, based on backtests and research you can determine key statistical info to enhance your trading, stops, runners, you name it.

Things like, probability of inside day, probability of outside day, atr for current volatility, etc etc.

Point is, the daily chart provides a plethora of key info and not just support and resistance, but a heck of a lot more.

On top of this, as if you didn't have enough, you can determine before the open if the chances of major technical damage to one side have occurred, alerting you of a potential trending day, which are rare but very special days for making more money than the norm.

Now that you have all of the above or an idea of how to study and/or research the above you may select your trading timeframe and use all of the info from your daily to enhance your trading on your selected timeframe.

Some suggestions, 15min or 60min, depending what you feel comfortable with.

Last but not least, be careful with suggestions in ET, there are a lot of posers in this forum acting as experts, spreading misinformation.

I've shared with you stuff in private, techniques, tips, even swing calls, you know I'm not preaching the moral while being naked so be careful asking for guidance in public from random guys, the vast majority hurt more than they help.

Hope it helps you get on the right track Joe.

Crazy A
 
Actually, there was a similar thread about this quite recently that you may want to read.

http://www.elitetrader.com/vb/showthread.php?s=&threadid=229163&perpage=6&pagenumber=1

Most days, the different time frames will be in conflict since a nice intraday move on the 5-minute chart is just a retracement or consolidation on higher time frames.

If you want to wait for everything to line up perfectly in the same direction, from the 5-minute up to the daily, you will not be in the market every day, but those are high probability trades when they do line up. This approach may be more relevant if you are following multiple instruments and trade less frequently with higher profit targets.

I do however think it is the wrong approach if you want to be in the market every day and trade the intraday swings.

For intraday trading, figure out the relevant levels before the bell rings, anticipate different scenarios, plot them on your chart or write them down and use them as entry/exit levels for your intraday trades, but use only one chart during the trading day. If your main chart is the 5-minute, occasionally it can be smart to consult the 1-minute if the market is moving fast and the bars are large.
 
Quote from anglagard:

I find that using multiple timeframes for daytrading confuses me as I begin to doubt small trends conflicting with big trends and vice versa.

For instance, a strong trend develops on the 5 minute chart and I notice another trend on the 60 minute chart is approaching what I consider to be resistance. Not to mention the times price just decides to sit under it trying to break it for hours.

Well, sometimes, the 60 minute chart holds it, other times it passes by like thin air, so I asked myself, why bother with multiple timeframes if the support and resistance study that I gather from the other charts might or might not hold.

After this I decided to just trade one timeframe, started with the 5 minute, but truth be told, most of the time is just too noisy and the trends don't last, it's constantly chopping, which is absolutely a killer for my style of trading, which is trend following.

After this I switched to the 60 minute, and well, trends on the 60 minute can encompass so much space, they could be uptrending and a particular day price is downtrending inside of it!

I think you know where I'm going with this, this trading stuff is not easy!

I'm trying to keep it simple but without leaving the boundaries of daytrading which is the style I prefer.

Got to ask, which timeframes do you guys use for daytrading and how do you determine exits ?

If you only use one chart which and why.

If you use multiple, please state how.

Seriously need some guidance on this.

Thank you for your help!
More...

I think you are making it unnecessarily complicated. For me, one key principle is to only trade in the direction of the trend from the next higher timeframe. For daytrading, that usually means taking the trend from the 60 minute chart. Not taking trades from the 60, only using it to determine the trend. How you determine trend is not that important, eg MA, trend line, etc.

Then you only want to take daytrades in the direction of the higher time frame trend. Maybe you use the 5 minute or 1 minute or both, just don't take trades against the trend.

Some will say this approach cuts down on the number of trades you can take. of course, that is the idea. It is easy when daytrading to fall into the habit of being a fader. You can make money that way, but i think it is a hard way to trade. Most of your trades will be small-profit pullback type trades, instead of the big runner trades. I guess it's matter of personal comfort level, but you asked how to use multiple time frames, so that is how a lot of people do it.
 
Quote from AAAintheBeltway:

I think you are making it unnecessarily complicated. For me, one key principle is to only trade in the direction of the trend from the next higher timeframe. For daytrading, that usually means taking the trend from the 60 minute chart. Not taking trades from the 60, only using it to determine the trend. How you determine trend is not that important, eg MA, trend line, etc.

Then you only want to take daytrades in the direction of the higher time frame trend. Maybe you use the 5 minute or 1 minute or both, just don't take trades against the trend.

Some will say this approach cuts down on the number of trades you can take. of course, that is the idea. It is easy when daytrading to fall into the habit of being a fader. You can make money that way, but i think it is a hard way to trade. Most of your trades will be small-profit pullback type trades, instead of the big runner trades. I guess it's matter of personal comfort level, but you asked how to use multiple time frames, so that is how a lot of people do it.
More...


Thank you for your reply, I wanted to get that out of the way before posting my concerns to avoid sounding like a critic.

You say that is how most people do it, perhaps so, but isn't it true that most people actually fail at trading ?

In regards to Crazy A, I don't think he is complicating, in fact I think it is necessary to survive due to sudden changes of trends and strong unforseen events that do happen all the time, particularly in this market.

A sudden change of a trend commences and due to your previous trend bias all your signals will fail, this is not good enough, at least not good enough for me.

Once again, thank you for your reply.
 
Quote from anglagard:

Thank you for your reply, I wanted to get that out of the way before posting my concerns to avoid sounding like a critic.

You say that is how most people do it, perhaps so, but isn't it true that most people actually fail at trading ?

In regards to Crazy A, I don't think he is complicating, in fact I think it is necessary to survive due to sudden changes of trends and strong unforseen events that do happen all the time, particularly in this market.

A sudden change of a trend commences and due to your previous trend bias all your signals will fail, this is not good enough, at least not good enough for me.

Once again, thank you for your reply.
More...

I said "a lot" of people do it this way.

Of course there will be market conditions that favor one style over another. There will be times when the best approaches fail. That is where the skill component comes in. The idea however is to put the probablilities on your side. When trading the indexes, I am convinced trading woth the prevailing trend is the way to do that.

With individual stocks, some of the best opportunities do come with fading. For example, a common play is to fade the pop after a good or bad earnings report.

I am not advocating one approach over another. A question was asked about how to use multiple time frames, and I answered it based on how I do it. I would suggest you get some backtesting software and try out different approaches. That will also give you a chance to experiment with stop loss placement and trade exits, which I think are crucial components to profitability.

ps. I wasn't commenting on Crazy A's post incidentally. I meant you were overcomplicating things, not him. His post is very sound, and I agree with it. You seem to be looking for something that will always work, and that doesn't exist. You have to understand that trading is a probability exercise, not a right/wrong exercise.
 
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