Hi Guys
A question about time frames when looking at charts…
I am finding all the time that indicators are telling me different things from, say, 1day to 4 hour charts. Do you guys wait until all 3 time frames are saying the same thing (e.g. buy signals) or do you put more weighting on a particular one?
Does the activity shown in 1hr/4hr usually translate and be represented in the 1 day charts after a day?
Would love your thoughts,
Finn
Personally, I always put more weight on the larger time frames. However, I also think that it’s a good idea to wait until the signals on the H4 and daily time frames do not contradict each other.
There is no single right or wrong answer here. But the general approach is to identify the longer, underlying trend on the longer-term timeframe and then enter a trade when the shorter timeframe chart gives a signal in the same direction as the identified trend. But this is generally mainly ok when there[B][U] is[/U][/B] a main trend. Markets can often consolidate and range for long periods, during which a shorter timeframe, even 15m, can be more productive. During these ranging periods there is a bigger risk of whipsawing on the longer TFs because one is entering at a later stage in the move without sufficient subsequent follow-through to produce a trade profit,
These different TFs are only various ways of segmenting what is actually a continuous price movement into convenient chunks for evaluation purposes. A single candle on a daily chart will appear as 24 separate chunks on a 1H charts and present a visualisation of how the price has oscillated up and down within that single daily candle.
Some traders will only be interested in what that single daily candle indicates once it is complete whilst others will happily trade all those ups and downs within that candle. It is important to recognise what kind of trader you are when selecting which TFs are most relevant to your trading.
Yes that is completely true that indicators will give different indications in different time frames. As per my point of view, I will go for larger time frame as it can provide much clearer picture and better insight of trend and whats happening in the market but it also depends on your trading style too. If you hold your positions for long term or medium term, you can go for longer time frames like 1 day however if you prefer short term trading you can go for shorter time frames like 1 hr or 4 hr and scalping will demand in fact much shorter time frames. And also, if indicator gives similar indication in all the time frames, then it is actually considered as good indication or signal of the trend.