Thanks Formika, and I appreciate all your tips so far! I'm envisioning a mix of swing and day trading. My real job is flexible enough that I could probably daytrade 4 days a week if I wanted, but I'm thinking more like 2 days, and then in the evenings the rest of the week, researching and planning longer-term swing trades.
How to use multiple time frames?
- Thread starter Dollardogs
- Start date
Thanks Kaizer! Here's some concrete questions.
1. My system in a nutshell: I watch EMA crossover first, soon as it crosses over, I wait for a bullish engulfing, then I buy unless I see divergence on the momentum indicator or RSI looks strongly overbought. Then I sell after the EMA crosses down thru SMA at the first red candle. That's been pretty reliable so far, but I do often get faked out and sell too soon. Wondering if there's a way to use the candles or other indicators like Momentum or RSI to stay in a trade and be patient even though the EMA broke down thru SMA?
2. RSI - I have length set to 10. It was working great for awhile, 80 and 20 levels were reliable, then suddenly it wasn't reliable at all with the same stocks. What changed? The stock? The market? Adjust the length? I assume when an indicator stops working, I should experiment with different lengths and backtest until it works again, but I'm curious what's changing in the first place?
Your question in a nutshell: how to use momentum price derivative indicators to time entries/exits and how to define optimum parameters for these indicators.
My opinion is: this question leading you to the wrong direction of thinking.
Firstly, review the thread I mentioned in previous post. The thread starter 6+ years trying to do exactly this thing and his struggling path is perfect example of what NOT to do in process of becoming profitable trader. His story is typical and should be reviewed by newbies.
My humble opinion is:
1/ indicators should not be used for timing entries/exits
2/ indicators can be used for determining of proper context, as one of the filter(s) when to look for signal and when to stay away
3/ such thing as optimal parameter does not exist
4/ using multiple indicators is worthless
The topic of this thread is: how to use multiple timeframes? This question leads into the right direction and has nothing to do per se with indicators.
My advice is to study pure price action. Trends and the strength of trends. Support and resistance. Choppy price action and how to minimize the risk of being chopped (if you follow trends) or how to trade chop if you want (but trade off the different signals, not the same, than in trends) . None of these concepts needs indicators, pure price action is enough.
Here multiple timeframes concept appears: how to define context on higher timeframe(s) and develop trading signals for each context separately. Example: in strong trend the momentum based entry can provide edge, but in channeling trend its very late entry and leads to the heat.
Only after you get the good understanding of basic concepts of price action (it takes lots of time and effort) you can notice that adding the momentum based indicator can give you crude, but mechanical and good enough filter to define the context. And your Q’s about parameters will disappear by themselves. For example, if you know how to use hand draw trendlines for determining context, you can notice that some indicator X is good approximation of hand draw trendlines and you don’t need to do handwork and can use indicator X instead without significant change.
But - the very importnat point - the indicator step in only AFTER you have undestanding of the process behind, not before. The map is useful only if you can move, otherwise its useless (analogy).
My opinion is: this question leading you to the wrong direction of thinking.
Firstly, review the thread I mentioned in previous post. The thread starter 6+ years trying to do exactly this thing and his struggling path is perfect example of what NOT to do in process of becoming profitable trader. His story is typical and should be reviewed by newbies.
My humble opinion is:
1/ indicators should not be used for timing entries/exits
2/ indicators can be used for determining of proper context, as one of the filter(s) when to look for signal and when to stay away
3/ such thing as optimal parameter does not exist
4/ using multiple indicators is worthless
The topic of this thread is: how to use multiple timeframes? This question leads into the right direction and has nothing to do per se with indicators.
My advice is to study pure price action. Trends and the strength of trends. Support and resistance. Choppy price action and how to minimize the risk of being chopped (if you follow trends) or how to trade chop if you want (but trade off the different signals, not the same, than in trends) . None of these concepts needs indicators, pure price action is enough.
Here multiple timeframes concept appears: how to define context on higher timeframe(s) and develop trading signals for each context separately. Example: in strong trend the momentum based entry can provide edge, but in channeling trend its very late entry and leads to the heat.
Only after you get the good understanding of basic concepts of price action (it takes lots of time and effort) you can notice that adding the momentum based indicator can give you crude, but mechanical and good enough filter to define the context. And your Q’s about parameters will disappear by themselves. For example, if you know how to use hand draw trendlines for determining context, you can notice that some indicator X is good approximation of hand draw trendlines and you don’t need to do handwork and can use indicator X instead without significant change.
But - the very importnat point - the indicator step in only AFTER you have undestanding of the process behind, not before. The map is useful only if you can move, otherwise its useless (analogy).
Last edited:
1/ WRONG, I use them for over 20 years, and always worked well. Only problem is to find how to make them work. And apparently you don't know how to make them work.
2/ CORRECT
3/ CORRECT
4/ WRONG An optimal indicator does not exist, so you need to use a few. Only pay attention that they are not correlated.
PS: I have no clue what price action is, and consequently don't use it. Never needed it to make money.
Ah okay, this idea that enough people figuring it out will invalidate it. Makes sense.
Yeah I'm just getting started on understanding how/where to draw trendlines, no argument there, I can tell already that will take the most practice, looking forward to it, and I've been watching lots of charting videos on it. Think I'll start a separate thread on trendlines welcoming any advice once I get a little more practice at it if nobody minds.
And I did start to check out that thread you mentioned but after 6 years, it's 600+ screens so I only scratched the surface.
I'll always look in from above, from years, monthly, weekly, daily, intra intervals.. The longer time frames are important even if I'm trading shorter term.
But to each his own, honestly if you are just trading intraday you should just focus on intraday time frames and daily. The market is fractal so the ripple is in effect.
But to each his own, honestly if you are just trading intraday you should just focus on intraday time frames and daily. The market is fractal so the ripple is in effect.
Dollardogs: Just my 2 cents here but keep in mind that trading and market analysis have an "art" component. Anyone who tries to make it purely a science will end up frustrated and concluding that nothing works.