Taking a time frame to operate in is imperative, but it is also important to perpetually pertain to bigger and littler times frame for a form of causes.
Commodity traders may even employ yearly illustrations as the yearly highs and lows are substantive reference for support and resistance levels. W.D. Gann was very keen on the larger time frame, even working with 28 year cycles.
Monthly charts can pick up seasonal forms; cycles; monthly range, high and lows; and long term forecasting. There are so many ideas in this larger position of the market. And, even more subtle information can be gleaned from the monthly bar - is the closing price above the opening, which would indicate strength; is there extra volume this month than last month? If you're going to specialize in a particular market, then a monthly chart is thoroughly helpful even if you have to hand depicted it.
Weekly charts are very popular. Many investors and institutions prefer the weekly charts as they can view the medium to longer term trend. They can obtain a clearer perspective of the medium term outlook from a weekly than by using a daily chart. They are concerned about price; however value and other fundamentals as they develop individually need to fall into place. Smaller investors like us should also view the weekly trend, because if you're taking a position from the daily chart you can ask yourself: is the weekly trend on my side? The weekly chart offers the medium to major trend, and as many traders say, the trend is your friend. It is a conservative and solid approach to position and trend trading.
Daily charts, are the main workspace for many traders - momentum, swing, mechanical, breakout and many more styles of trading come into play from the daily chart. Essentially we are a global economy and what happens across the globe impacts directly on our local markets on the day chart. These global changes impact during the night markets and on the opening create many trading opportunities for the day trader. The volatility on open also means other time frames of from 30 minutes or less become very much useful.
If you're trading a 1 minute chart in the FX markets with Bollinger bands or other indicators, it is helpful to keep an eye on a larger time frame perhaps 20 minutes. It is also important for the new trader to remember that just because you're moving through different time frames, don't move your stops wider. Other FX traders may use 15 and 30 minute bars and keep an eye on the hourly bar looking for support and resistance and other analysis factors that make up their trading method. Some traders may use two or three screens displaying a diversity of charts in multiple time frames. Traders also could exercise a combination of weekly, daily, hourly and 5 minute, such as a swing trader may view the weekly chart for medium trend and patterns, then scan the market on a daily chart time frame for opportunities, then use the hourly chart to focus in on the support level for the pull back, then use the 5 minute chart to execute the entry as accurately as possible.
Multiple time frames may sound a little complicated at first, however they are quite simple. A news case will affect the price and this in turn affects whole time frames in different degrees. I think Elliott wave is a good example of different degrees of trend, which need to be viewed in different time frames. There are of class traders using trading methods that persist in merely one time frame on the intraday level perhaps only using the 10 minute bar chart. Each market is different and each trader is different so there are no wrong or right time frames to use, it's an open book.
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