Examples of trade signals?

[BobbiDigital]

Could someone give me an example of a trade signal this context:

Say you trade 60 minute charts but dial down to 1 or 5 minute entries. Would your signal be based on how the 60 minute closes and then look for a 1 or 5 minute setup within this context if R:R is there? Otherwise how else could you place small risk trades..

 

[braincell]

Quote from BobbiDigital:

Could someone give me an example of a trade signal this context:

Say you trade 60 minute charts but dial down to 1 or 5 minute entries. Would your signal be based on how the 60 minute closes and then look for a 1 or 5 minute setup within this context if R:R is there? Otherwise how else could you place small risk trades..

There are endless possibilities and combinations but what's a good idea and what isn't you can find out by trying it out yourself. In your case, the 5min setup is actually the intrabar of the 60min, so it should only increase your accuracy of execution, and it may lower the Risk/Return, but it also might not. It depends on how the original signals are generated. Some people do use 60 to 5 minute conversions but that is just another way of doing low pass filters on your signals. On the other hand, you could have a system for 60, 30 and 5 minute bars, and do position sizing based on how the 3 signals agree with each other. Like I said, there are endless possibilities and i'm not sure what your question is since it's probably too broad.

Lower time frames (ie 1 minute vs 60 minute) should in most cases give you a lower average trade and thus a smaller risk/return. The risk of major drawdown decreases if the distribution of your longest loosing streaks doesn't change (increase) from 60 to 1-minute systems, but the cost of transactions increases since your slippage and commission will now eat up more of the average trade in terms of percentages. It's a trade-off, as always.