Timeline for day trader

Hi Everyone

I just started forex a few weeks ago and I covered school of pipsology (really helpful, thank you babypips for such detailed info). Currently I am trying to figure out if I am a day trader or scalper but I am having problem with the chart and indicators timeline.

Currently I’m using several indicators which are ADX, Stochastic, MACD and EMA. In addition to that I use Fibonnaci retracement, trend lines and Candlesticks. My charts set up are 15minutes (with data range of 1day) and 2hours (with data range of 10days).

1: As a day trader how far back should I look at the charts and indicators to make my decision regarding the trend? Should I e.g. check the last 8 hours or 24 hours or 48 hours etc… I know looking back several weeks or months is useless since the effect is only useful for swing trader but for a day trader the period is vague to me.

2: Also as a scalper how far back should I look at the charts and indicators to make my decision regarding the trend? Should I e.g. check the last 15minutes or 30minutes or 1hour etc…

3: Do I need to treat different indicators timeline differently or are they all the same for day trader and scalper?

Thank you

Hey there subasa! Here is what works for me.

As a day trader I like to look at 1h or 30m, whichever gives the best perspective. This gives me the view I want to watch for pullbacks on a trend. I like to look at macd on 4h to tell me momentum which tells me the probability that the pullback on 30m is just a pullback and not a 30m trend change. I get in after the pullback goes in the direction of the 1h trend.

The way I view indicators in different time lines is that the closer pushes the further. I never trust stochastics on anything less than 30m. But notice that the overall movement of macd on 30m pushes 1h and overall 1h macd movement pushes 4h.

The only indicator you need, in order to determine trend, is the [B]fractal[/B] indicator. This indicator identifies what are called [B]swing highs[/B] and [B]swing lows[/B] on any time-frame chart.

(Note that the word “swing” here does not refer to so-called “swing trading”. Rather, it refers to alternating highs and lows which satisfy certain mathematical requirements. These alternating highs and lows occur on every time frame.)

The trend identified in this way is called [B]market-flow[/B]. If you’re not familiar with it, here’s an article which explains the basics — Market Flow � Invest FX

For day trading, I would suggest looking first at the trend (market-flow) on the Day chart. Then look at the 4-hour and
1-hour charts for [B]agreement[/B] with the trend you see on the Day chart.

Note that I said agreement, not confirmation. The trends on the 4-hour and 1-hour charts can agree (or disagree) with the trend on the Day chart, but they can neither confirm nor contradict it.

Think of waves within waves. Suppose your Day chart shows you a clear downtrend. We know that price seldom moves in a straight line. A clear down-move on the Day chart will consist of a series of small waves, up and down, which likely will be captured on the 4-hour chart. And each small wave on the 4-hour chart will consist of a series of smaller waves, up and down, which likely will be captured on the 1-hour chart.

The small waves cannot confirm, nor contradict, the trend you see on the Day chart. But, about half of the time, they will be moving in the same direction as the trend on the Day chart. That’s referred to as agreement, and that’s a good thing.

If you see a clear downtrend on the Day chart, a clear downtrend on the 4-hour chart, and a clear downtrend on the 1-hour chart, you can be pretty confident that price is heading lower now, or will be heading lower soon, because all three waves are heading lower.

If either the 4-hour trend or the 1-hour trend is in agreement with the Day trend, but the other is not, then price is likely to do some backing-and-filling (or slicing-and-dicing, if you prefer) before moving lower in an orderly fashion.

If both the 4-hour trend and the 1-hour trend are out of agreement with the Day trend, you might be in for a rough ride if you try to trade the Day trend.

Some traders will trade in the direction of any two of the three (market-flow) trends. You probably won’t know whether you agree with that tactic, until you have considerably more experience under your belt.

If your definition of scalping is the same as mine, I’ll have to say that the only trend that matters is the trend on the chart you are scalping. If you are scalping on the 1-minute chart, then the trend you want to trade with is the trend of the last several 1-minute candles, on the far right-side of your chart.

Scalping is high-speed, in-and-out trading. You may or may not be able to pay any attention to market-flow, as determined by fractals, while you are engaged in something as intense as scalping.

I wouldn’t know how to use indicators for scalping. Scalping, as I use the word, is pure price-action trading on momentum bursts. It’s important to keep an eye on key support and resistance levels (but those are not indicators).

One possible exception to what I just said would be moving averages. They are indicators in the sense that they are mathematically derived from price; and, to some extent, they function as [I]dynamic[/I] support or resistance levels. So, a carefully selected moving average could be helpful to watch when scalping.

Hi guys, my apologies for the late reply and thank you to both of you, for your detailed replies. I got a good picture of what to do now.