Time Frame
One question that every trader must deal with in trading or investing is
Time Frame.
The Time frame is more important than the indicator parameters used by a
trader or investor.
The focus of the column is on Day Trading. However, the same patterns,
indicators and moving average parameters may be used on 5-minute, 15,
minute, hourly, daily or weekly data.
The key is to be consistent in your trading style and risk reward
parameters.
A Day Trading stop loss of average profit may be 1 to 2 points. A longer
term trader may allow a stock to move 5 to 10 points against him before
receiving a new signal.
To demonstrate the concept visually, below find 3 charts of
MicroStrategy Inc. (NASDAQ: MSTR).
These charts are all produced using the same technical indicator used every
day in this column.
Moving Average Crossovers of 5 and 22 exponential moving averages.
MACD (Moving Average Convergence/Divergence with a 9 and 15 period parameter
Momentum of 22 periods
OBV (On Balance Volume) Traditional Application
As you can see, the shorter the time frame, the more signals and the quicker
a signal will trigger on any of the indicators we use in this column.
On MSTR, who know what and when!
The lesson here is to choose your time frame and stick with the trends of
the market.
