I am currently working my way through Ed Ponsi’s [I]Forex Patterns and Probabilities[/I] (great book, by the way), and have just made it through the chapter on trends.
Basically, Ed recommends riding the trend for all its worth - so when you see a trend forming, all other things being equal, you really shouldn’t be betting against the market.
However, I have the distinct impression - and correct me if I’m wrong - that the trending methodology seems to apply more for 1D+ TFs, simply because they tend to filter out a lot of the noise and actually make it easier to spot the trend (and, therefore, reinforce it).
It contrast, 15M TF seems to be all over the place - to the point where I would be more inclined to describe it as a range rather than a trend. This is, of course, an important distinction, considering that you use different strategies for trending and ranging markets.
My question is - would you consider it to be a legitimate strategy to treat 15M TF as a ranging, rather than trending, markets, and therefore base your trading system more on support and resistance, and less on the long-term benefit of riding the trend?
Of course, trends do exist in 15M, 5M and 1M (I believe Clint once posted here four screenshots of charts from different TFs, and most people couldn’t tell which TF each belonged to) - however, in your opinion, can they be disregarded as an engine of long-term gain? Does the 15M TF lend itself more to ranging systems?
Basically, 15min trends and ranges just like any other TF. You can’t really choose a TF because it’s more ranging, it doesn’t work like that.
Base your choice on other things, such as time available for trading - if you’re like me (day job) you’ll be better of trading 4H or dailys. That has the added bonus of better reliability on trade setups.
Hey George, it kinda sounds like that we both are at the same point of trying to dial into our respective time frames. This may not be true, but that is what i got out of your message. Anyhow …
I am at the point to where i am going to have 2 of my demo platforms running at the same time. The first one will be a longer time frame showing the 1hr and above time frames and the second one showing the 1m to 30m time frames.
The longer time frame i will be setting up just the basics. This will include S&R,
Fib retracements and trendlines. I will then make a decision as to entry, SL and TP and then leave it alone.
The shorter time frame, i will be trying to learn how to scalp successfully. I actually like to watch the monitor all day long as that does not bother me at all.
By doing this i should be able to ascertain which time frame would be correct for me to trade. This at the least will verify to me that if i consistently lose money trying to scalp and can win on a longer time frame, or visa versa, i can multitask and get there quicker.
A trend can exist in all TFs, but the question is how significant
is each trend? Also an uptrend can exist in the 15M when a
downtrend is happening in the 4H chart & vice versa.
The difference is that the lower TF trend will only last a short
period of time, but if we look at the bars printed & match this to
a daily chart, the amount of bars in the trend can be the same.
The only reason the TF needs to be clarifed for any system is so
that the trader knows when a profit (or loss) should be taken.
For example the IB system, see James’ threads* can be applied to
higher TFs but be aware that on the 1H chart the bars are 1H apart
so it could take all day to see a profit (or loss). On the daily, days or
even weeks.
Which chart are the candles below taken from?
But the system can still be traded, it is up to the individual trader
to decide which TF they prefer to trade.
In fact, I know this is going to sound very noobish of me, but it seems that the reason for my failure to identify coherent 15M trends was due to… ahem, zooming WAY too far out on MT4. As a result, the trend was all over the place.
Dialing it down to a two-day range made the picture a lot more coherent, at least for EURGBP (I’m going bullish on it).
Thanks a lot for your advice and sorry to have wasted your time in this manner - I guess that’s what you get when you combine flu with studying Forex for the past 12 hours.
I’ll just point out that EUR/GBP is well known to be one of the most ranging pairs, a good choice therefore for S/R bouncers and breakout faders. However, even the least trending pair will trend…
Questions like this never waste my time it is good to see
such a well presented question.
Carrying on with the theme a little I came across this piece
in another thread, it throws a little more light on the subject.
Both threads ain’t too bad either.
one mans range is another mans trend. By that I mean you can actually locate mini trends inside the larger range boundaries if they extend out enough.
Taken from 301 Moved Permanently thanks to Andre Mayer.
