First of all, let me just say that even though this forum is not as ‘busy’ as another one I go to, I feel better about asking potentially ‘stupid’ questions here as the people seem to be much friendlier to newbies.
I just read the 5th grade chapter here at BabyPips about ‘Common Chart Indicators’. The problem here is that I don’t know what time frame to use as I notice a 4 hour chart will show much different results from a 1 hour chart or from a 15 minutes chart for example. In my two months of practice Ive found that Intra-day trading (with a little swinging tossed in) is how I prefer to trade. Give that information, what are the best time frames to use when using indicators like Bollinger Bands, Moving Averages, Stochastics etc.
I don’t think you should really have to worry about stupid questions. I’ve been learning, posting and reading many forums for about 2 years now and there is still so much to learn.
Only you can decide what timeframe is best for you but the one thing you should keep in mind is that the longer the timeframe the bigger your stoploss should be. For instance You could see a nice Doji morning star occur on the 200MA on a 4 hour chart, but on the daily chart it would just be a long bearish candle. You might go short thinking it will plunge but if you look at the earlier time frames you would get advance notice that the pair is about to go up. If you could only look at the charts once a day, than you better have your SL we’ll below or above the S/R points or your just going to be stopped out.
I personally like to draw trendline on the monthly, weekly, daily & 4 hour charts. The just use pure only price action and candlesticks patterns that occur around these trendlines or some major moving averages to determine when the price might reverse. I make my trades on the 4 hour time frame which is just 6 candles a day. The only indicator I am using is the MACD histogram to look for momentum to change direction at the same time the price is hitting a major S/R level. Granted you might only get a few good high probability trades a week but they will be we’ll worth the wait. I also like to look for divergences between the MACD histogram & the price to have some idea when the up or down move is running out of steam.
Also remember that whatever indicators you use they will be much more reliable on the higher time frames. You have to decide how much time you can spend looking at the charts. It might even be a good idea to look through months worth of data to see how much better the price repsonds to you setup on the hiher timeframes and backtest your system to get the best results.
Good Luck to ya and sorry for the long winded post!
Yes, there are forums where quite a few persons have the attitude that says “go read, Im sure you’ll find it somewhere” when they could simply answer the question. The assumption is made that most people are lazy and don’t bother to try to find any information before asking.
Now Topgun has already given you a splendid reply and it seems difficult to add to his excellent post.
I do not use any indicators except the statistical Bolinger band. I am a full candlestick trader - my avatar says it all.
I am also an intraday trader and that means that I need lots of candlestick patterns…so…I use many time frames from 20 mins going up by 5 minute increments thro to 1 hour.
To this I add a daily frame for curiosity and 1/5 minute time frame to get best entries.
Thats a total of 12 intraday time frames including the daily!
My trading is very successful and I make money rapidly but I am staying low profile with that for now.
If you find this at all inspiring then I explain my full approach on another thread…FOREXTOWN - “Indicators for scalping Please post here”.
I have 2 posts on this thread - the 2nd is the expanation.
Another thread with may have relevance for you is FOREXTOWN - "Technical Mis - analysis"
There you will find an excellent post by Rhodytrader, another Master contributor like Topgun.
As a typical newbie this is what I did. I tried to scalp so I started with the nosiest time frames. Then after I was unsuccessful with that I moved to bigger time frames like the 1h and then I moved to the 4h and then I finally moved to the Daily and Weekly charts and I am staying there! They seem to be the most beneficial charts and I am not sure if I will ever go lower than those two!
I suggest you try all the time frames and see what one is for you!
