the length of indicator for different time interval
- Thread starter rcsmie
- Start date
For me, it all depends, but I use an equivalent multiple of the other. For example, let’s say that I wanted to represent the hourly trend on a five-minute chart. I would start by plotting what I call an “instantaneous moving average” on a one-hour (or 60-minute) chart (which I had to create myself because I was dissatisfied with all the zero-lag moving averages available to retail traders).
My next step would be to find the standard moving average that was the closest match to the instantaneous moving average, and then finally multiply that standard indicator’s setting × 12 (because 60 ÷ 5 = 12) to arrive at the equivalent moving average to plot on five-minute charts…
My next step would be to find the standard moving average that was the closest match to the instantaneous moving average, and then finally multiply that standard indicator’s setting × 12 (because 60 ÷ 5 = 12) to arrive at the equivalent moving average to plot on five-minute charts…
I use the same exact numbers for every time frame, from 15 min to 4h.
Due to the fractal nature of the markets, what works on the smaller time frames also works on the higher time frames.
Unless I am mistaken, I think OP is not talking about the equivalence from time frame to time frame.
how does that work?
it shouldn't work the same, right?
I mean it doesn't make sense if a set of length would work for both ends of the spectrum(for being very long and very short of the time span)
And yet, this is the way practically everyone does it. When I first started posting my approach on this Forum, almost everyone tried to convince me to abandon my methodology. But I "stuck to my guns" and I'm glad I did. Using the same set of moving averages regardless of the time frame always struck me as counter-intuitive as well, so I adopted a system that seemed more logical and this has worked out rather well for me.
Let's say you always use the daily time frame to trade. Let's also suppose you follow the trend with a 20 and 50 period simple moving average and your system is profitable.
Then one day you decide to apply your system to day-trading so you switch to the 5 min charts.
What numbers should you use for your simple moving average?
The same numbers of course (20 and 50), because what works on the daily time frame (or any other time frame) also works on other time frames.
Just like a head and shoulders pattern works on the monthly charts AND the 5 min charts AND the 1 hour chart, etc...
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I’d not change the settings.
Because a 20 MA is about the past 20 candles.
It’s time invariant.
It’s about frames and candles.
Depends what you’re trying to solve.
Why would you average the last 20 candles ?
Is that information helps your decision making process ?
I thought if you are looking at daily chart, then use 22 length would make sense cause that's about how many days being traded in a month, or just stay at 20 for approximation.
In my head, I'd think there's always a reason for a certain length to be used. Guess default would be fine since that's probably what most of the poeple would use. You gotta see what most of the people do, that should give you an edge by knowing it.
I decided to go with the default setting cause that's probably what most traders use. You want to find out what majority of the people do and knowing this would give you an edge I think.