Day trading tips: Trade with Timeframes

Nov 30, 2014

Lots of good news is coming through, especially for bears, which I’ll share with you all later 🙂

Here is a quick tip to help you in your day trading strategies.

Stock markets have become heavily volatile in this quarter and even though traders get multiple opportunities to trade both in up and down directions, a major challenge in such situations is deciding upon a trade entry point.

How do you know, when markets are going to come down from higher levels or bounce back from the day’s low levels?

In short, when do you enter a short trade or a long trade intra day, for multiple trading?

This is where “time frame trading” provides excellent help to traders.

I came upon a wonderful article regarding this method on a forex trading site, dailyfx.com. You can read ( and you MUST read it if you want to learn tricks of the stock trading) it here: The Time Frames of Trading

For lazy ones, here is a summary of main points, which you can observe on any technical chart of your favorite index/ stock.

We all know that technical charts have different timeframes ranging from 1 minute to 1 month.

Trading with timeframes has two parts;

(1) Spot the trend on bigger timeframe.

(2) Spot the trade entry with the help of Slow Stochastic indicator on shorter timeframe.

So, you first spot the trend; is it up or down?

Then you look at the Slow Stochastic to spot “overbought” or “oversold” period. This will be your trade entry point. These points show saturation in markets and a trend reversal point. (check the original article here for chart examples).

Other points to remember:

–          trade with the trend. So, in positive trend you will enter you trade at a dip, or buy at the support as I keep telling you. An “oversold” position on charts will tell you that support has arrived and you can enter a long position.

–         Likewise, in a negative trend, an “overbought” position will tell you now markets are ready to tumble from resistance and you can enter a short position.

–          Use combination of one long timeframe (to spot the trend) + one short timeframe ( to spot trade entry) for your trading strategy based on you trading goals. Please note, all timeframes do NOT work together. So you must choose those Timeframes that are “friends” with each other.

For example;

–          if you are trading for a few days (positional) then use Weekly+ daily charts. Weekly charts will show you the trend, and daily chart will show you trade entry.

–         Use daily + 4/5 hours charts for intraday, longer duration trading.

–         4/5 hours + 15 minutes chart for intraday, short term trading.

Do check out these points on your favorite chart; as I did. And you’ll be ready with a good “weapon” for battling in stock markets from Monday. If you win, don’t forget to say thanks to me for bringing you such helpful trading tricks 🙂

See you soon.

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