My Thoughts on Timeframes

Maybe it's a reflection of the me generation - gotta have it, gotta have it now! I am getting a lot of emails about trading with 15-minute and 5-minute charts. People don't seem to have the patience for 30-minute charts.

I will repeat what I said earlier - a chart is a chart is a chart. A quality set-up will appear on all timeframes. But, you have to realize that trading on a 5-minute chart is different than trading on a 30-minute chart, even if you are looking for the exact same set-up.

First and most importantly, things unfold very fast. You have to be quick to analyze and pull the trigger. And, if you are looking at a watchlist of 20+ charts every 5-minutes, you are going to make A LOT of mistakes. You will take sub-par set-ups, you will miss really good set-ups, and you will probably neglect managing your open positions properly - which will cause you to give back gains, miss stops, and miss profit targets.

And, I don't even want to get off on a tangent by discussing the possibility that the set-ups you are chasing might suck (for lack of a better word). A 5-minute chart means more opportunities to trade, and if you are trading a bad set-up then you are going to lose more money.

5-minute charts are fast and unforgiving. If you have been trading for years and are consistently making profits on a larger timeframe, maybe then you want to look at moving to something quicker. But if you are trying to perfect your trading, and you are break-even or losing more money than you make, you need to stick with the higher timeframes. A 30-minute chart gives you time to do some solid analysis (is it really a good set-up?). It gives you time to think. It gives you time to take in and analyze the price action and the chart as a whole. And, it gives you time to manage open positions and protect profits and capital.

If you are serious about being a successful trader, treat it like a business and minimize your risk. Perfect your abilities on a higher timeframe, and then consider branching out.

I use 15-minute charts and 30-minute charts - combined they represent about 90% of my trading. I sometimes reference 5-minute charts in conjunction with the higher timeframes to get a more precise entry, but I rarely (almost never) trade 5-minute charts in a vacuum. So, I will continue posting 30-minute charts but I will also bow to public demand and begin posting more 15-minute charts.

Thanks for the feedback!

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Tags:
Trader-X, Stocks, Fibonacci, Trading, Technical Analysis