Timeframes - Perspectives

I can't remember if I wrote about this or not, but though I use either a 1, 3, or 15 min. timeframe to trade, I do look at higher timeframes to see a bigger picture of what is going on. It's always a good idea to know what the big picture looks like for what I believe are obvious reasons.

If they are not obvious, then let's take a big look at the S&P over the lifetime beginning in the 1920s. Using a Monthly timeframe, what does this look like to you? I asked my 4 yr old son and he said it looked like a big M and that it wasn't finished.

So, I wonder if the market continues on down to the 700s, or to 1000ish, would it be surprising?

When do you suppose these numbers may make a difference? As a daytrader trading small timeframes, there is some significance, but since all my positions are in cash at the end of the day, the daytrader is a bit more flexible, IMO.

What if your timeframe for trading is in weeks or months, such as a long-term investor? Think those number may be MORE important? Sure, if you're LONG on positions and the market being @ 1271 and if it goes down to 700s, think it might be a problem? There's almost a 600 point difference there, and perhaps shorting might be better?

Using various timeframes allows you to see different patterns within patterns within patterns. Maybe on a monthly timeframe, you're right in the middle of a pattern, but on a Daily timeframe, you're reaching a resistance. This might be good to know unless you want to sit through a retracement, right?

This doesn't just apply to the price chart, but also on things like the RSI, Volume, MACD, and whatever other indicators you may be using. If RSI is well into overbought on the 15 min., but it's in oversold on the 3 min., it may have issues attempting to push up much more, so be looking for perhaps a reversal or at the least a pullback.

It's always good to look from different perspectives. And, once again, if you have in your trading plan to look at certain timeframes, consistently do that. If you looked at every single timeframe there is, that becomes overwhelming, and then you cannot make a decision as to what to do.
2 Responses
  1. Werner Says:

    Hello Doris,

    I just discovered your blog yesterday. I spent some time going back to read your earliest posts and I have to say you have one of the best "trader" related blogs or websites I have ever seen. You have made an instant fan out of me.

    Not only is it very instructional and motivational, but I enjoy the voice in which you write your entries. It gives us a peek into the mind and mind-set of a trader and how the day-to-day events of life can affect us as a trader. Your blog is unique in that no one else on the 'Net does this.

    I will be sure to read all of your existing posts as well as your ongoing ones.

    As a new trader, I look forward to the contribution of your teachings as part of an all encompassing learning process as I embark on my own "trader's journey".

    May you experience success in every aspect of life.

    Regards,
    Werner
    wfmeyer@gmail.com


  2. Doris Says:

    Hi Werner,

    Thanks for the compliments. I know a lot of people want to know the Holy Grail to make all the money they will ever want in their lives, but I've not really found any blogs that really talk about the life of a trader, one who is not single and can devote all their time to trading, and has a life outside of trading.

    My technical analysis in trading is very good and I can compete with some of the best traders, at least I've been told by some really good traders who make a lot of money. However, what keeps me from being an even trader is the "other stuff" in life and my blog talks somewhat about that.

    I sort of go back and forth on it, and though I keep it to somewhat of a minimum, I think it's important. Most traders are not single, but many have other jobs, families, marriages, and a host of other things to contend with.

    Some trading blogs, I have no clue how they write and keep up with all that stuff. I know if I did all that, I'd never see my children or step away to even go to the bathroom or eat.

    Maybe some have a staff of people working on things. So, what is a person to do if they want to have a life, don't have a staff working to develop their website, and want to share with others? You get a blog like mine.

    And, the thing is, crap does happen in our lives, so how do we deal with it? What is realistic? It's just my story.

    Bless you, and becoming a good trader takes time. Hopefully you can learn from some of my successes and failures to shorten your time, your learning curve.

    God bless you,
    Doris


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