I have always been taught to use the 1 hour and 4 hour charts as my higher timeframes when day trading the 5 minute chart. However, I have realised that if I draw my support/resistance levels on the 15 min chart, there are more opportunities for me throughout the day and I feel that if I was looking at 1 hour S/R levels, I would be waiting for a very long time to have a day trade which does not make sense.
Am I correct in saying that the 15 minute S/R levels should be used for trading the 5 minute charts as a general rule?
You dont seem to have had a reply to your question from any of the PA experts on BP so I’ll drop here my 2 cents, for what its worth…….
It is really only a question of what kind of trading you are looking to do. If you are looking for quick 10 pip trades off a 5min chart then 15-60min higher timeframes are better for your purposes. But if you are looking to stay in a (day)trade for longer, say 2-12 hours, for example, then it is maybe preferable to use synchronised 4H-1H higher charts for direction and your 15-5 min chart for specific timing on entry and exit.
But it is worth thinking about what your 15min S/R levels really are. On those time intervals (on any other intraday TF for that matter) they have no greater substance or underlying significance than the fact that a whole bunch of other day traders like you are also using the same chart picture with the same technically- driven logic. In other words, S/R reactions on a short TF are mostly pure crowd pyschology with a short life and limited follow-through - a bit like shooing squirrels off a bird table, only for them to return as soon as you turn your back!
But keep in mind that the additional S/Rs that you are looking for on the 15min TF are only visible because they are nothing more than the internal price fluctuations within the 1H and/or 4H charts and therefore extremely unreliable and certainly mainly without any lasting significance.
But this is tradeable in a very short term way if you know what you are doing. However, you need to be very precise and disciplined with your entries…and very strict with your exits, especially with those that go wrong (otherwise you will burn off a whole day’s successful trades in about 2 mins at the end of the day and go to bed miserable - or end up with a big revenge trade to recoup the damage and double it instead! ) .
Being selective with the choice of trading sessions and products is also quite critical here.
Edit:
I would also add that (IMHO) this form of trading on such a short term basis is time-consuming, intensive and extremely demanding, and is very difficult to achieve a consistent level of performance …and requires large position sizes to really make it worth the effort in the long term (but a good way to gain experience! ) On the plus side you do not need to worry about missing out on moves as there are always opportunities at this level and you can choose when and where you trade - and you have no open risk to bother you from longer term positions when you are off the markets doing other things….
I think it really depends on how you define your S/R level and your strategy. Do you trade the breakout or the bounce? Back test it, if your 15 min S/R works for you. By all means, carry on. Nonetheless, i don’t think it will be wrong to use the 15 min S/R, stop loss may be tighter and from a risk reward perspective, that could be in some ways an advantage. I may be wrong though…
) .