Relevant Data

Hey Guys,

So when analyzing a 4hr or 1 hr chart how much data is relevant to a day trader (holding positions for max 1-3 days)?

Most platforms for a 4hr chart would give a month worths of data on the screen, is all of that valid for shorter term traders? i have been reading/hearing conflicting theories on this.

Thanks :slight_smile:

Personally, I’d want at least 10 years data. This depends how serious you want to be within testing. Anything under a year though is no use to anyone, regardless of the trading approach.

Edit: sorry, are we talking about back testing? Or rather the data which you can actually fit on your screen in one go?

I [I][U]think[/U][/I] we’re talking about “how far back you need to look, to set up your charts for trading, e.g. how far back to look at levels of support and resistance”, aren’t we? :33:

On that basis …

Not sure, because I don’t trade that sort of time-frame. Maybe a month or a month and a half, together with a very generalised overview of a longer period than that?

Don’t take this as a “reliable answer”! I’m guessing, to some extent, and opinions are surely going to vary, too.

But anyway my initial “offer” is “a month or a month and a half”, and let’s see who agrees/disagrees with it (my guess is that more people will think I’ve [I]under[/I]estimated than that I’ve [I]over[/I]estimated, but like everything else around here, that’s going to depend on who replies, isn’t it? :wink: )

(I’ve also assumed we’re talking about forex, here, not stocks/commodities etc.)

Hey guys,

Yeah my question was more for day to day analyzing to set up a trade rather than for back testing (although I appreciate the info for back testing, I am gonna need it soon)

For this question the reason for my asking is I am trying to understand how relevant is a month old or 2 month old trend/support level for a trade I am going to make today? (Short term trade on a 4hr chart)

Just like EMA is more recent data like 1week or 2 weeks more relevant?

Scenario: month long trend is down, but last week it has been going up. So should I consider a long or short position? I know ofc more goes into deciding which position to take, I am just trying to understand in this context. :grin:

No. :slight_smile:

(Again, I’m guessing because I don’t do 1-3-day trades, but if I did, I’d probably want the week-long and month-long trends to match, I think. Those would perhaps be my “two higher time-frames” to confirm the trend, and give me a directional bias about which trades to be looking for.)

Overall, I think so, yes (just like more recent S/R tends to be more relevant, when you’re looking at S/R). There can be exceptions though (just as with S/R: a level very frequently touched/rejected, longer ago, [I]can[/I] still turn out to be more significant).

The kind of time-frames you’re looking at can involve “fundamentals”, too, which is why I’m slightly nervous of answering, because that’s not exactly my [I]forte[/I]. :8:

As a rough and ready rule how about if your maximum “look-back” period is 6-12 times your maximum holding period? That’s about what I have - I hadn’t quantified this into numbers before but it seems right. I don’t trade for max 3 days, my max would be about 4 weeks, average 2 - and the data I want from charts is all within the last 6 months. That said, I use the 200EMA as a reference and that obviously is calculated from further back than 6mths, but I’m not looking at the TA as such over 6mths ago.

Personally, I think trying to quantify by ‘time’ is the wrong approach.

Price levels that are of importance are not justified by how recent they were formed, but more so if they have held ground.

If you’re asking this question because you’re trying to zone in on ‘what really matters’ then I understand.

However, by zoning in too much you will miss the bigger picture.

If you are an intraday trader, I think data for the last month will be the best for identify the trend and place an order. However, it’s worth to mention that for taking the big picture of the currency you can have a look at long-term timeframes.