Hi,
I’m planning to start trading on a longer time scale than the intraday trading I do now. Prefereably trend-following.
My experience in this field is rather limited, and I was wondering what timescale you guys use to define a underlying trend. I reckon that it should be a relationship between the time-frame of the trend on have defined, and the time frame you are planning to be in the trade.
Thanks in advance.
I’m am doing the same since I work full time. I have a live account and was using the Hourly scale only to realize after loosing a few hundred dollars that I was following the wrong trends. You can’t neglect any of the time scales.
First look at the yearly scales and make your way down to weekly, see if the trend is holding, move to the daily. The trends mostly follows the daily. If you look at hourly trade only when it matches the trend of the daily…if say the hourly is going down but the daily is heading up, wait for the hourly to start heading up and put the trade in to follow the daily or weekly trend.
Basically following longer trend give potential for higher profits AND higher losses. Short charts are too limited but can help identify an early reversal.
Read the babypips School section on chart trends. It’s exactly what was happening to me.
Note: you can’t fully rely on trends, you got to keep up to date with economic data accompanied by technical analysis. I use the Stochastics and Directional movement charts.