chart help

[sjzeno]

hey guys,

i been investing for a year now and have just started with TA. I am almost done reading my first book and have been reading alot on incrediblecharts.com
when you guys look at charts for support/resistance, triangles etc...
what are the best settings to use if you wanted to trade a stock for a 3 week period?

[Luc1Grunt]

mmmmm.......

"trade a stock for a three-week period".....not sure how a time target is determined as opposed to a price target or reacting to the actual price as it occurs over 3 weeks time. Need a little more explanation on that. I am assuming swing trades or a little longer....


Try daily candles and look at monthly, 6 month, 1 year and 2 year charts. You will see things differently with each period. The pattern you "think" you see should remain in tact.

Sorry to say that you will have to look at thousands of charts before you see the patters and "warnings" jump out at you. I still see something new everyday.

You can use 5 minute charts for better entry intra-day.

Hope that helps, welcome to the forum.

[netwrangler]

mmmmm.......

"trade a stock for a three-week period".....not sure how a time target is determined as opposed to a price target or reacting to the actual price as it occurs over 3 weeks time. Need a little more explanation on that. I am assuming swing trades or a little longer....


Try daily candles and look at monthly, 6 month, 1 year and 2 year charts. You will see things differently with each period. The pattern you "think" you see should remain in tact.

Sorry to say that you will have to look at thousands of charts before you see the patters and "warnings" jump out at you. I still see something new everyday.

You can use 5 minute charts for better entry intra-day.

Hope that helps, welcome to the forum.Grunt, you are a veritable font of knowledge.

Just to clarify what I think you are saying:

When using daily candles as the data input, the 'pattern' seen should be visible across charts using different time frames [X-axis scales]. Are my words a fair, if not particularly clear, restatement of your words?


Are you are using 5-minute candles intraday as a compromise between data immediacy on the one hand and the need to smooth the trading volume a little over time on the other — the purpose of the smoothing being to allow the intraday candles a chance to form a more discernible pattern.

If that's a fair statement, would you go with a shorter time period [say, 3-minute candles] for a more heavily traded stock? Go 10-minute candles for a stock more thinly traded? Or am I talking about counting angels dancing on the head of a pin here?
TIA

[Luc1Grunt]

Grunt, you are a veritable font of knowledge.

Just to clarify what I think you are saying:

When using daily candles as the data input, the 'pattern' seen should be visible across charts using different time frames [X-axis scales]. Are my words a fair, if not particularly clear, restatement of your words?
Are you are using 5-minute candles intraday as a compromise between data immediacy on the one hand and the need to smooth the trading volume a little over time on the other — the purpose of the smoothing being to allow the intraday candles a chance to form a more discernible pattern.

If that's a fair statement, would you go with a shorter time period [say, 3-minute candles] for a more heavily traded stock? Go 10-minute candles for a stock more thinly traded? Or am I talking about counting angels dancing on the head of a pin here?TIA

Net, let me take a crack at them by the numbers.

1. Take a double bottom for example. Looking at a daily chart of one month may show only a small piece of a larger pattern. As you zoom out to longer periods...see how the pattern you noticed in the short term begin to change. That double bottom may be a part of a donw or up trend on the longer term chart. I think consideration is given to bigger charts, but trading the time period you are using is critical. Hope that made some sense...I'll look for an example tomorrow.

2. The 5 minute daily may help with entry depending on range, volatility etc. If I were to enter 100 shares of AAPL for a swing position (say...1-3 weeks), I would be a little more concerned about the entry because of the swings. With a 4-6$ daily range, I could be flirting with an immediate loss on a bigger target. Why enter at 189 if I can get in at 183.90? The target may be 192 in 3 weeks, but why not maximize NOW if possible?

From another angle...if the entry of 100 shares of AAPL is for a long-term investment, my decision will be to buy on a certain day or whatever my criteria are that convinced me to "invest. In that case, I have a long time horizon to "smooth" the difference of 400-600$. So maybe an entry at open or close is on order.

I think my opinion on this comes from long term value investing over the years and trading intra-day for the past few. Inefficient entry 10 years ago in Chevron at 40 is now ancient history with the dividends and growth realized since. I'm babbling.

I'm not sure what the question is in your last comment.

A successful trader gave me great advice regarding time of charts: trade in the period I am trading. If I'm trading in minutes, use a 1 minute or 89 tic chart with the 5 minute open for confirmation or warnings. May help to look at a daily for any surprise patterns as well.

As always....I'm sharing some experience and things that work for me. I'm not an "expert" by any means. I look to learn something everyday...and DO!!!!

Net, it's time to enjoy the good life with friends for a little while. Enjoy the weekend!!