choose a timeframe

Let's call this post how to choose a timeframe for trading a trend....

What's a trading trend ?

There could be many answer to that but by most standards a trading trend is a divergence away from the average trading quote.

To choose a timeframe to trade on is more about knowing what type of trader you are. The three main types of traders are daytraders, swing traders, and long term traders; long term, mid term, or intraday and short term.

Trends develop on every timeframe. There are divergences or moves away from the average on 5 second timeframes and there are divergences on daily, weekly, and monthly trading charts.

How to choose a timeframe to trade by is about to become easier for you if you follow these simple rules to trade by.

The hang eleven trading method we propose on this blog uses a MACD to help identify momentum. To see more on settings see our post index.

A MACD is an oscillator and moves above and below a zero line according to price momentum.

A touch of the zero line is a signal. At least it is to us. But alone it is worth very little. It isn't enough information to enter a serious trade in the direction of the momentum.

Suppose we are trading intraday....

For daytrading purposes short timeframes are of the essence. Sure, longer trends are important but a daytrader or short term trader, scalper, or whaterver name you prefer to give this type of gambler, is looking to get in and out in a day, give or take.

A daytrader might choose a timeframe of 15 minutes for a trend or a momentum shift that is diverging away from the mean. A trading day is usually full of support and resistance and this spells opportunity which can be monitored on shorter frames. A 5 minute, 1 minute, and even 5 second time frame can be used to find areas of resistance on the fifteen minute momentum trend.

If there is a long pause and retrace into the 15 minute chart and then a reversal indicating potential continuation of the trend then this will become apparent when the MACD on the short timeframes crosses above the zero line. These crosses are ereas to enter trades in the direction of the longer timeframe.

This same reasoning applies to mid term trader who might use an hour chart, with a 15 minute, 5 minute, and minute chart. And the same for the long term trader who may look to the daily chart for trend and follow up with trade into retracements on the 4 hour, hourly, and for super tweaking really short frames.

What's left to do if you know how to choose a timeframe ?

More important than choosing a timeframe to trade on is the ability to manage the amount of exposure you can put on a trade. Equally important is discipline to carry the trade to it's full potential.


All much easier said than done.

More on timeframes and trends...
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This blog is for education purposes only. Use this information at your own risk.

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