2 replies to this topic

[NAV]

Knowing one's timeframe of trading and adhering to signals in just that timeframe is something i painfully learn't over time. A 30-min trader looking at 5-min charts can go thru lot of temptations to take profits early or get scared out of the position on a small sharp retarcement on 5-min. On the other hand a 30-min trader looking at 120-min charts or a daily charts can get a false sense of security that all is well, although his timeframe might be yelling "Get out". Multiple timeframe anlalysis gives a lot of useful information about the overall context, but a trade has to be executed in it's own timeframe purely based on signals in it's own timeframe IMHO. Today was a good example. I executed a long trade which i posted in my blog. At 2:00 Est, there was a no-brainer long trade on the 30-min charts for the momentum traders. The momentum blast was sharp and i quickly pocketed about 7 points around 1473 level. Why ? Cuz the hourly RSI was already overbought and it rarely gets extremely overbought that late in the day, in the absence of any news. If i were looking at the 120-min charts i could have said, "There's plenty of room to move higher. I am sitting tight". What happened next ? They pushed the ES all the way to 1466 (below my entry level of 1466.5) and jammed it into the close. Being a 30-min charts trader, guess what i would have done, when i saw that big red candle around 1466. I would have bailed at breakeven ( as opposed to pocketing 7 points). Did i lose any action as a daytrader by taking profits around 2:30 Est ? - Nope !. The close on ES was 1472.75 at 4:15 Est. Now why did the ES trade all the way down to 1466, below the 2:30 Est 30-min bar, which displayed such good momnetum. It's very simple. The RSI was overbought and that's a good excuse to clean out the stops. The boyz know too very well that a 30-min trader would be trailing his stop below that big candle, if he is already in profits. Guess who wins in the zero sum game. Those who can see the stops. They make sure you go home with zero profits without leaving you with the privilege of enjoying the next day's run. What's the trade for a higher timeframe trader. It's still a long. Should they hold overnight ? Yes. Should the 30-min chart trader held the long ? - Nope. Is there a short setup for any timeframe trader at the close from 5-min to 120-min? - Nope. Should i be anxious that i will miss a runup tommorow or a gap-down tommorow? - Nope. No matter what the markets do, there's always 1-2 trades in a day for a daytrader on the 30-min charts even in runaway markets. Good night !

Edited by NAV, 11 September 2007 - 11:08 PM.

[NAV]

Oops, i forget to mention that my rant was applicable only to momentum trading. There are many other ways to skin the cat though.

[BigBadBear]

agreed 100%. Look at them playing with the futures. I am hoping they bring them down 100 on the DOW so I can back up the truck