Hi everyone. I have read this, like an iceberg it contains more than its on. enjoy it..
The shorter your time frame, the greater the ramdomnes of price movements.
Since the market is reasonably efficient the prices wont differ too much, but
that of course is a function of your time frame. The smaller your time frame, the greater this distortion Two or three pips difference in a day wich average a 100 pips movement is far less significant than two or three pips in a ten minute period averagin only, say, a seven pip move. On a risk management level this also amplifies the risk exponentially. Its simply not true that you can apply universal risk management principals of risk reward, stop loss and other parameters on all time frames.
A coin, like a five minute graph, has no memory. Just because it has come up heads eight times in a row, it does not startto "adjust itself" in order to provide the required probability balance of a 50/50 ratio over a given number of flips.
Five minute charts are the same. They are like coin flipping. These 5 minutes periods have no memory. So why watch them for signals? People do, but very few make money from it. Those that do are doing something else besides, they are doing the right things using the wrong methods. They probably have a good grasp of the fundamentals and the bigger picture, trade with discipline, have a sound money management strategy, and so on.
Short time frames give you no information that can turn a random series of price events into a series with higher predictive certainty.
Bird watching in a Lion country
Best regards.
If your trade went bad you'd lose 20 grand as well, but if it went well then you'd be seeing profits of $50,000 once or twice a month. I am still saving to have a bigger account.
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