Timeframes used for Entry, Trade Management and Exit?

[danielsan]

Hi,

I am a newbie and I am interested mainly at this point in learning to trade the Fx market. I realise I have a lot to learn and a long way to go before opening a live account. Here is one of my first trading questions

Please correct my following understanding or lack there of

If I want to trade the hourly chart (just an example) then I could look at the daily for the bigger picture/trend then find my setup on the hourly chart but enter on a smaller time frame perhaps 5 min chart for a possible better entry point?. Now once I have moved too the 5 min chart and made my entry should the rest of the trade management be done back on the hourly chart that was used for the setup such as, stoploss placement, trailing the stop, possibly taking a further entry once the trade proves itself. I would like to let my profits run, so with a trailing stop and the eventual getting stopped out should this all happen on the original hourly setup chart or the 5 min chart used for entry.

I appreciate your help

 

[Trembling Hand]

Of course you would have many many sim/back test to answer the question for you. Then you would know what to expect once you start putting real money on the line.

but maybe you are asking to start simming/backtesting? I would say daily to hourly to 5 min is too far a spread. For me I use 1 min for the trade, 5 min for the bigger trend and 15 min for the larger timeframe support/resistance/trends.

And of course the daily before trading just to have a look see.

 

[Lone Wolf]

Some people only trade off daily charts and consider the 5 min chart to be useless noise. Others like to scalp and so don't care much at all what the daily trend is.

Do you have a strategy yet? What timeframe you use depends on how you want to trade. Under what conditions will you enter? Where is your initial stoploss? How will you manage the trade once you're in? You mentioned trailing your stop. How will you trail it? These are more rhetorical questions, you don't need to tell us, but you do need to know the answers.

Once you have a solid strategy in mind you can sim trade or backtest as TH suggested. Then you can trial different timeframes for yourself and see what gives you the best result. Give your strategy enough time to get some meaningful results. Identify what worked and what didn't. If you change your strategy every time you take a loss you'll never find out what you're doing right or wrong.

I suggest sim trading on the same platform as you will trade on when you go live. Many spot forex brokers use metatrader 4 as a platform and most offer a free demo with free live data. Some MT4 demo accounts expire after a month, after which you just create a new account and off you go again. Some don't expire at all, I think FXPRO is unlimited time demo.

 

[ginar]

as TH stated going from a daily to 5mins is way too much . hell even 60m to 5m isnt really sensible . after looking at a 60m and going straight to a 5min that sudden 5 tick move looks huge whereas on a 60 its hardly a blip . sometimes its a bit like looking at an elephant with naked eyes from 20 feet and then looking through a telescope at same elephant from same distance . the elephant flinches and with a naked eye it all looks reasonably calm , through that telescope its going to look like its charging you . the perspective is skewed . for a lot of people balancing those 2 perspectives is difficult . when volatility kicks up those fast time frames can look crazy when in reality its just normal price action

 

[joea]

Hi,

I am a newbie and I am interested mainly at this point in learning to trade the Fx market. I realise I have a lot to learn and a long way to go before opening a live account. Here is one of my first trading questions

Please correct my following understanding or lack there of

If I want to trade the hourly chart (just an example) then I could look at the daily for the bigger picture/trend then find my setup on the hourly chart but enter on a smaller time frame perhaps 5 min chart for a possible better entry point?. Now once I have moved too the 5 min chart and made my entry should the rest of the trade management be done back on the hourly chart that was used for the setup such as, stoploss placement, trailing the stop, possibly taking a further entry once the trade proves itself. I would like to let my profits run, so with a trailing stop and the eventual getting stopped out should this all happen on the original hourly setup chart or the 5 min chart used for entry.

I appreciate your help

Hi.
There is a book available, "Technical Analysis Using Multiple Timeframes" by Brian Shannon.
The book can be looked at inside.
There is a table inside showing relationships of timeframes, but the middle of table is hidden. Not cheap, but I notice early in the book the 4 stages of the chart cycle clearly explained.
Cheers

 

[danielsan]

Of course you would have many many sim/back test to answer the question for you. Then you would know what to expect once you start putting real money on the line.

but maybe you are asking to start simming/backtesting? I would say daily to hourly to 5 min is too far a spread. For me I use 1 min for the trade, 5 min for the bigger trend and 15 min for the larger timeframe support/resistance/trends.

And of course the daily before trading just to have a look see.

No I am not simming or back testing yet (more knowledge required), I am truly just unsure of how the time frames work from entry through to exit. The timeframe I spoke of was purely an uneducated example

Thanks for telling me what timeframes you use, I will keep that in mind for possible short term trades in the future.

 

[tech/a]

I personally use 1
If the markets ranging then Ill be looking for shorter time frame trades 1-3 min --in and out.
If Its a trend then Ill go further out.1hr to Daily

 

[danielsan]

Some people only trade off daily charts and consider the 5 min chart to be useless noise. Others like to scalp and so don't care much at all what the daily trend is.

Do you have a strategy yet? What timeframe you use depends on how you want to trade. Under what conditions will you enter? Where is your initial stoploss? How will you manage the trade once you're in? You mentioned trailing your stop. How will you trail it? These are more rhetorical questions, you don't need to tell us, but you do need to know the answers.

Once you have a solid strategy in mind you can sim trade or backtest as TH suggested. Then you can trial different timeframes for yourself and see what gives you the best result. Give your strategy enough time to get some meaningful results. Identify what worked and what didn't. If you change your strategy every time you take a loss you'll never find out what you're doing right or wrong.

I suggest sim trading on the same platform as you will trade on when you go live. Many spot forex brokers use metatrader 4 as a platform and most offer a free demo with free live data. Some MT4 demo accounts expire after a month, after which you just create a new account and off you go again. Some don't expire at all, I think FXPRO is unlimited time demo.

Thanks for your reply.

I don't have a strategy yet, I am still trying to learn the basics. I realise I need to use stops and the reason I mentioned it in my question was because I want to know in which timeframe I should monitor them, (in the setup chart or the entry chart) or perhaps I would be better off just entering and exiting on the setup chart and not bothering with a smaller timeframe for a possible better entry point?

I have recently opened a demo fx account and I am starting to find my way around in the metatrader 4 platform, I have not started doing demo trades yet but I am in no real rush, I want to get the basics sorted first.

 

[motorway]

There is a sort of relationship of volatility to time..

That relates really to scale

It involves the square root of time

You want to increase your scale by a factor of 2

So √16 min is 4 √4 min is 2 & √1 min is 1

This is a factor of 2 on the square roots

Now 16 min bars 4 min bars and 1 min bars are pretty close to TH's selection

Which are more standard view

You are approximating a view that allows for Twice the Volatility in a Theoretical sense
of one aspect of volatility.. When you increase by a factor of 2 on the square roots of the time periods...

√4 = 2 ,√16 = 4 , √64 = 8

So if your smallest bar was 5 min. then approximate would be to use 15 min and then Hourly..

This is increasing the scale view by a factor of 2
To do this perfectly you would need to move away from time bars
and use eg range bars , renko or P&F etc

Which can scale perfectly inside each other..


Motorway

 

[danielsan]

as TH stated going from a daily to 5mins is way too much . hell even 60m to 5m isnt really sensible . after looking at a 60m and going straight to a 5min that sudden 5 tick move looks huge whereas on a 60 its hardly a blip . sometimes its a bit like looking at an elephant with naked eyes from 20 feet and then looking through a telescope at same elephant from same distance . the elephant flinches and with a naked eye it all looks reasonably calm , through that telescope its going to look like its charging you . the perspective is skewed . for a lot of people balancing those 2 perspectives is difficult . when volatility kicks up those fast time frames can look crazy when in reality its just normal price action

Thanks, the example timeframe I used was not the best by the sound of things and has thrown a spanner into the works of my underlying question, but the info you have given me is good to know.

 

[danielsan]

Hi.
There is a book available, "Technical Analysis Using Multiple Timeframes" by Brian Shannon.
The book can be looked at inside.
There is a table inside showing relationships of timeframes, but the middle of table is hidden. Not cheap, but I notice early in the book the 4 stages of the chart cycle clearly explained.
Cheers

Much appreciated, I have a couple of books on order at the moment and I will keep this one in mind, what do you mean by "the book can be looked at inside" and "the middle of the table is hidden" ?

 

[danielsan]

I personally use 1
If the markets ranging then Ill be looking for shorter time frame trades 1-3 min --in and out.
If Its a trend then Ill go further out.1hr to Daily

Thanks for your help,

Ok so there is really no need to enter or exit on a different chart that was used for the setup it can/should all be done on the setup chart from start to finish apart from initially looking at a longer timeframe first for trend identification?

1. Longer timeframe to confirm trend.

2. Smaller timeframe to find/confirm setup

3. This is where my confusion has been, if I was to use a third timeframe chart to enter should I then stay with this timeframe chart for trade management to the end of the trade or revert to the setup chart and stay with it until the end of the trade?

 

[danielsan]

There is a sort of relationship of volatility to time..

That relates really to scale

It involves the square root of time

You want to increase your scale by a factor of 2

So √16 min is 4 √4 min is 2 & √1 min is 1

This is a factor of 2 on the square roots

Now 16 min bars 4 min bars and 1 min bars are pretty close to TH's selection

Which are more standard view

You are approximating a view that allows for Twice the Volatility in a Theoretical sense
of one aspect of volatility.. When you increase by a factor of 2 on the square roots of the time periods...

√4 = 2 ,√16 = 4 , √64 = 8

So if your smallest bar was 5 min. then approximate would be to use 15 min and then Hourly..

This is increasing the scale view by a factor of 2
To do this perfectly you would need to move away from time bars
and use eg range bars , renko or P&F etc

Which can scale perfectly inside each other..


Motorway

Thanks for your reply, interesting stuff and I am taking it on board, but I think perhaps my thread title "Timeframes used for Entry, Trade Management and Exit?" may be detracting from my underlying question from my original post

Of course perhaps I have asked my question in a confusing manner, bloody newbies
(talking about me no one else)

 

[joea]

Much appreciated, I have a couple of books on order at the moment and I will keep this one in mind, what do you mean by "the book can be looked at inside" and "the middle of the table is hidden" ?

Hi
On Amazon if you select a book and click the book. they give a view of the contents and maybe something else to look at.
With the multi timeframe book, put title in webb search. This particular book loads up so you can flick the pages over. So basically you see quite a few pages as you go through the book. Not all the book is available. In the time chapter, the author has a table with x & y axis associated with time periods. The middle of table is blank to get you to buy the book thats all. Its just how the preview of the book is displayed.

Cheers

 

[ginar]

LAWS OF MULTIPLE TIME FRAMES

1. Every time frame has its own structure.

2. The higher time frames overrule the lower time frames.

3. Prices in the lower time frame structure tend to respect the energy points of the higher time frame structure.

4. The energy points of support/resistance created by the higher time frame's vibration (prices) can be validated by the action of lower time periods.

5. The trend created by the next time period enables us to define the tradable trend.

6. What appears to be chaos in one time period can be order in another time period



http://www.fibonaccitrader.com/FAQ/What_is_multiple_time_frame/default.htm


pretty well sums it up

 

[Lone Wolf]

I don't have a strategy yet, I am still trying to learn the basics. I realise I need to use stops and the reason I mentioned it in my question was because I want to know in which timeframe I should monitor them, (in the setup chart or the entry chart) or perhaps I would be better off just entering and exiting on the setup chart and not bothering with a smaller timeframe for a possible better entry point?

I think you're having trouble getting a straight answer to your question because it really depends on what trading strategy you use.You don't have a strategy and you don't know what you're looking for in a good setup. Yet you believe that you should find a setup on a certain timeframe and then go to a lower timeframe for your entry. It looks like you've skipped a step. You won't know how best to enter or manage the trade until you have a better idea of what trade setup you're looking for.

But with that in mind, the best answer I can give is - In my opinion there is no need for a beginner to use different timeframes for setup and entry. Many people use a single timeframe to find a setup, manage the trade and exit the trade. If you want to focus on the basics of trading, then personally I'd recommend sticking to one timeframe for setup, entry and management until you get comfortable with it. Use the higher timeframes for trend confirmation and support and resistance You can think about looking at shorter timeframes to improve your entries once you have a strategy in place to improve the entries for.

 

[danielsan]

Hi
On Amazon if you select a book and click the book. they give a view of the contents and maybe something else to look at.
With the multi timeframe book, put title in webb search. This particular book loads up so you can flick the pages over. So basically you see quite a few pages as you go through the book. Not all the book is available. In the time chapter, the author has a table with x & y axis associated with time periods. The middle of table is blank to get you to buy the book thats all. Its just how the preview of the book is displayed.

Cheers

Hi Joea,

I see what you mean, thanks for that mate, I will have a look at the book on Amazon.

 

[danielsan]

LAWS OF MULTIPLE TIME FRAMES

1. Every time frame has its own structure.

2. The higher time frames overrule the lower time frames.

3. Prices in the lower time frame structure tend to respect the energy points of the higher time frame structure.

4. The energy points of support/resistance created by the higher time frame's vibration (prices) can be validated by the action of lower time periods.

5. The trend created by the next time period enables us to define the tradable trend.

6. What appears to be chaos in one time period can be order in another time period



http://www.fibonaccitrader.com/FAQ/What_is_multiple_time_frame/default.htm


pretty well sums it up

Thanks Ginar,

Some good info there much appreciated, That's the first time I have heard reference to "energy points" and "vibration" I see it must be a fibonaccitrader term.

Actually one of the trading books I have ordered is By Frank Dilernia called Market Trading Market Timing and I believe they use the Fibonaccitrader software to run their market analysis, methodology although I don't think they use the Fibonacci technique but they do utilise the software.

 

[danielsan]

I think you're having trouble getting a straight answer to your question because it really depends on what trading strategy you use.You don't have a strategy and you don't know what you're looking for in a good setup. Yet you believe that you should find a setup on a certain timeframe and then go to a lower timeframe for your entry. It looks like you've skipped a step. You won't know how best to enter or manage the trade until you have a better idea of what trade setup you're looking for.

But with that in mind, the best answer I can give is - In my opinion there is no need for a beginner to use different timeframes for setup and entry. Many people use a single timeframe to find a setup, manage the trade and exit the trade. If you want to focus on the basics of trading, then personally I'd recommend sticking to one timeframe for setup, entry and management until you get comfortable with it. Use the higher timeframes for trend confirmation and support and resistance You can think about looking at shorter timeframes to improve your entries once you have a strategy in place to improve the entries for.

G'day Lone Wolf,

Mate I think you are bang on the money with your comments. I guess I was getting a bit ahead of myself there and its excellent to hear that it can all be done from the setup timeframe chart. As you mentioned once I get that down pat I could focus on using the shorter time frame to possibly improve my entry. Starting to make sense already. Much appreciated!