Hi Everybody, I hope to put my question clearly and also hope for some clear answers:
So, say, I have a strategy saying that 3 indicators should show the same trend. So, I check a general trend on 4 and 1H charts ( without setting indicators yet); I set indicators, then I go to, say, 30M chart - indicators don’t match the entry, on 15M chart- they match, but, e.g. on 5M -don’t match, and 1M chart -they match the entry. The question is: which time frame do take into consideration to enter my position? Do indicators need to form a trend on more than 1 chart? ( how many 2,3?)
Thank you in advance for all your answers.
In general, larger time frame is use for trend determination. Smaller timeframe is use to locate an entry point , the Best entry point is when smaller timeframe is opposite of the larger timeframe trend. For example, 1min, 5min, 15min, 1hr , all 4 timeframe indicate bearish momentum. You wait for 1min or 5min to turn bullish. Say if 5min turn bullish , usually 1min also bullish. At the immediate moment, when 1min or 5min turns bearish. You click sell. Thats how you use the smaller timeframe for opening a position.
In addition to the above, when do you take profit? It depends on the strategy you adopt. One easy way is to wait for 2cycle of oscillator indicator to complete. Or a fixed amount of pip. Some people just let it run. Some people use ATR stop.
[QUOTE=lexys;718303][U]The time-frame for which the strategy was developed[/U], and on which it’s been back-tested and forward-tested and proven to have an edge.
Thank you lexys, your opinion is very well explained. You ensured me in my original thinking. Have a nice day.
Another question from me to you, please take some time to give me your opinions. So, I check indicators, candle sticks, Investing com suggestions ( strong buy, sell, etc), but as always I hear that sentences : go with a trend. My broker’s website has something called “trend” where they show a current trend of a given pair. Let’s say: indicators show sell, candle sticks show sell, too ( as far as I can read them, yet), but this trend thing on the website shows more people buy. Twice I placed my transaction based on the latter and it occurred to be correct. I wonder what would you do, guys? Is looking at the trand per se good for short time frames?
Thank you for all your answers.
Brygida
It [I]can[/I] be, Brygida. But it’s far more likely to be good when the trend is also in the same direction on the next two higher common time-frames.
Example: looking at the trend (however you define it, for your own purposes) on a 15-minute chart [I]can[/I] be helpful just in itself, but it’s much more likely to be helpful on the 15-minute chart if the trend is also moving in the same direction at the same time on the one-hour and three-hour (or four-hour) charts.
This kind of “trend usage” is well explained by Marcel Link in his book [I]High Probability Trading[/I].
And as for determining the trend according to your own broker’s representations of it: well, the usefulness of that is going to depend on what input parameters [U]they[/U] use, to determine it (but it’s still potentially better than nothing, anyway!).
[QUOTE=“lexys;721440”] It can be, Brygida. But it’s far more likely to be good when the trend is also in the same direction on the next two higher common time-frames.
Thank you gor your answer. It totally makes sense, I will also look for the book you’ve mentioned.
The situation you describe, where there are contrary signals even amongst very short term signals, suggests to me a period of consolidation in progress which would be difficult to trade with any success.
I don’t think there is any point in comparing 4H with e.g. 5m and 1m charts, it is a bit like comparing movements of an oil tanker in a harbour with a bunch of holidaymakers in speedboats to decide which way the tide is moving. A 5m chart may give some good trades while the 4H is in a strong stage of a new trend but can whipsaw when the 4H starts to slowly consolidate and reverse - or you miss some good 5m moves in the “reverse direction”!
Personally, I think 2/3 time frames should be enough. The longer time frame is usually used to determine the underlying trend and the current stage in its life cycle. The shorter time frame is usually used to identify the trade entry when in line with the longer term trend.
Exit strategy is perhaps far more difficult to optimise on a mechanical basis. I do not think it is a good idea to use the same indicator set for your exit as you use for your entry, e.g. MA crosses. If this worked in the long run then you would not need any long-term time frame at all. Most lagging indicators seem to give back a frustratingly high proportion of any profit before triggering exit, especially in volatile markets, as do trailing stops. On the other hand picking likely tops and bottoms is very difficult and requires constantly monitoring the trade in case the target is missed by a few pips and the market reverses.
The decision regarding which timeframes to combine really depends quite a lot on your trading profile e.g. position v. day trading and whether you prefer to set your trades and leave it or sit and monitor them. Personally, for example, I couldn’t ever sit and watch a 15min chart evolving -each 15m bar would be an emotional roller-coaster and feel like an eternity waiting to see where it actually finished
Perhaps, if one does not want to sit in front of a screen all day (or cannot) then a practical exit strategy might be to select a fixed limit that relates to the typical movement on the chosen timeframe.E.g. 15 pips on a 5M or 20-25pips on a 15M. A stop should also be in relation to the target pips for good risk/reward. If your indicator set on your chose timeframes give you a higher win probability then you should end up profitable. trouble is you then miss the adrenalin of a big win on the occasional big move!
Another consideration that helps to avoid false signals is to be selective about times to trade e.g. only European/US sessions, avoiding times before big economic data releases, watching for national holidays, etc, etc.
You should open your position after market watch , analysis and trend definition .When you are some how confident you will get some pips of profit. You ma loose in it but your try will be to gain something from trading. With open positions you should remain active and careful to close it on appropriate time or use TP and SL in trading so that your positions remain safe for you.
