Online Calculator | Improve Day Trading Results By Paying Attention To Other Time Frames

Improve Day Trading Results By Paying Attention To Other Time Frames

Short term, or day traders, use price charts all the time to determine whether they should buy or sell.  They normally use a timeframe spanning from tick based (bars based on number of trades that happen rather than time) to maybe 10 minute charts.  They look for buying and selling patterns in the price of the stock to try to figure out when to go in with the least risk.  Since these types of traders are solely focused on the near term action, they are only in a position for a few minutes, and perhaps a few hours at most.

 

One thing a lot of people who are day trading fail to look at is the longer time frames since they are not trading them.  They might be concentrating on a 5 minute chart, which looks long, but fail to realize that the 30 minute chart is near a resistance point and in a big downtrend.  They go long because the chart setup looked good, but end up losing because the higher time frame is what is guiding the price.  Because day trading is an odds game, no matter how good you are or what setup you are playing, some of them are going to lose.   But if a trader were to take the longer term trend into perspective before putting on a trade, some of the losers, or at least higher risk trades, can be filtered out and your results should improve.  At the very least, it would guide your profit targets and stops, which would also improve your overall results.

 

All trading involves risk, and is purely an odds game.  Day trading is not for everyone, although the level of action often draws in a lot of people who have no business trying it.  Traders need to just keep the higher time frames in focus when they are learning day trading, and the end results should improve a decent amount.  This keeps traders focused on the primary trend in the stock, and should they choose to go against that trend with a trade, stops and targets can be adjusted accordingly.

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