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What’s Trading time frame?

Discussion in 'Beginners Bootcamp' started by Mark Muffin, Oct 20, 2009.

  1. Mark Muffin

    Mark Muffin Recruit

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    Most people described it as the length of time you will have to invest or trade or remain in the market, hence, many try to link the concept to traders’ personalities. While in the actual sense, the dictionary meaning of time frame is defined as “a period which something (activity) occurs or is expected to occur"

    Thus, trading time frame has to be universal and not just what fits to trader xyz personality. So what’s your opinion on this?
     
  2. Ricex

    Ricex Sergeant

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    Not entirely sure I understood the question, but if your talking about time frames on charts as in 1m, 15m, hourly etc. I look at them all! not sure what that says about my personality...... observant..... paranoid?
     
  3. Pharaoh

    Pharaoh Colonel

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    Time frame can refer to chart times (15 minute charts, 4 hour charts, etc.), or can refer to whether you trade very short (scalping) term, short term, medium term, or long term.
     
  4. Cyclon

    Cyclon Company Representative

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    The Evergreen Question

    The Evergreen Question

    This is such a persistant topic and so important.

    You have brought up a new slant on it so I hope
    that it is not a problem to re-post this directly here
    from a thread of my own. (Just to try and give Pharaoh
    a run for the lengthy article award I added a new analogy).

    A while ago I wrote something in which I pointed out the
    first question you will always hear from a newbie.

    "What Timeframe should I use?"

    You should give them credit for spotting the unanswered question in
    most educational materials for trading, no matter what the market.

    No one will give a straight answer because it gets way too complicated.
    The real truth of the matter is that there is no clear answer because
    the question is wrong.

    Most will already know the following basics, that timeframes are methods
    of grouping data into containers for display. These bars or candles have
    their features of open, high, low and closing values. Those are then used
    for basing indicator settings.

    OK so how does that relate to the 'question' being wrong?


    Very simple... the candle is a man-made vessel for displaying arbitrary
    amounts of data. This actually has nothing to do with markets.

    The market does NOT recognize a 15 minute bar, or ANY other size.
    There is NO rule, NO system, NO common denominator for the
    relationship of the close of one bar to the low of another (or any other
    combo), no matter what the size of container. Nothing that will hold up
    anyways, even though you may occasionally be able to get 'things that "work"'.

    New analogy:
    Imagine a Grocer trying to do statistical analysis on
    his database of transactions (ticks) by dividing the
    data into some arbitrary chunks - how about 100?

    Now will that help him sell more milk (predict a Bullish
    Trend is about to start)?

    So while collecting our data into bars is a convenience and even a
    necessity, it leaves out an obvious feature of markets.

    This feature and also the fibonacci relationships inherent in all tick data
    have been lost in the translation of what the market "says". So what is
    this "feature", so obvious, yet which we've been unable to see?

    Very simple... SPEED CHANGES.

    This stares us in the face every time we look at a chart and yet there is
    no mention of it. A momentum indicator or any other similar device, or a
    system which incorporates one into a 'method' will still suffer from the
    weakness of not taking the speed changes into account first, and
    instead, relying on the blind arbitrary candle to render the reading.


    Allow me to demonstrate how simple and obvious this is.

    The following chart has a 100 period Simple Moving Average on it,
    a fairly slow setting, especially in volatile forex.


    [​IMG]


    The area in the tan elipse has the MA wobbling through it, getting turned
    easily. The area in the gray is quite obviously running at a different
    SPEED! It's faster. What accounts for the speed change, what speed IS
    it, and where or when or how is it determined?

    In other words, "What SPEED should I use"?


    The market set the speed for the faster area inside the tan area. This
    was the setup for a 5000 pip run (it all couldn't fit in that pic and show
    what I needed to demonstrate and the 100 SMA had nothing to do with the trade).


    However the measurement of speed produces great results. This actually
    gets done to prepare for exhaustion analysis, then pullback analysis,
    then again after the trade is put on to check for slowing or growth which
    indicates a continuing run. Even the terminology gets to be a problem
    since the feature so obviously present has no language because it
    previously had no recognition. Language aside, however there are
    mechanical steps to locate the "tells".

    Resulting signals come out of them such as this:

    [​IMG]

    Not the red check but the trigger on that purple indicator.


    Now I can imagine that when someone sees the pictures I have which
    show these indicators catching the supertrend's reversal on the
    retracement, they may think that this is ONE standard indicator like they
    are used to using.


    It is not. Each one is different and the market has told us which one to
    use. It has also told us on which timeframe to use it.

    The combination of settings and timeframe is "SPEED" of analysis.


    So therefore the appearance may be that these are just some
    cherrypicked location where the indicator has coincidentally wrapped
    around favorably and the picture is snapped. But the reality is that these
    are cherry picked by the market. The settings are handed to us.



    What is the first question you hear from a newbie?

    "What Timeframe should I use?"

    Answer: If that is all you do is choose timeframe, it won't matter. The
    results will be statistically similar to the results of traders as a group in
    any market. It isn't pretty.

    Cheers,
    Cyclon
     
  5. Geert Anthonis

    Geert Anthonis Private, 1st Class

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    Come again..., please

    Hi Cyclon,

    Your entry looks interesting and I think I know what you are trying to say but at the same time you totally lost me.

    May I ask that you specify your answer a little more or give more details. Though I have been very unsuccessfully trading forex for the past 2 years (so far down around 15,000 Euro), I find it hard to get to terms with the terminology used. So using words like "simple" make me truly feel inadequate.

    I'm reading the boot camp but it raises more questions than it answers. Sometimes it feels all the mails in most forex forums are written by and intended for experts.

    Please explain your theory a little more. You might actually be on to something but I want to make sure I understand it correctly.

    Thank you
     
  6. jpadventure

    jpadventure Private

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    I hope you've reduced your trade size until you find something that works.

    I don't use time frames anymore, I find specific price levels of interest so, it doesn't matter to me what time frame is used. I pick the one that gives the clearest picture.

    It depends on an individual strategy which one to use.
     
  7. John Bozeman

    John Bozeman Private

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    I agree with Cyclon (for the most part). I rarely (if ever) base trades off of candlestick patterns. I've backtested PLENTY of candlestick formations in plenty of different time frames and the results are almost always the same- 50% of the time the market becomes bullish after the candlestick, and 50% of the time it becomes bearish after the candlestick. These are man-made concepts, and they sell for $$$ when these theories are in books.

    Don't get me wrong, I have certain setups that I always trade based on, and I enjoy looking at the Daily and 30-minute intervals, but my trading is not ultimately based on some superior system that only works in 1 specific time frame.
     

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