STOP USING TIMEFRAMES LOWER THAN 1 hour, increase profits - page 2
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when designing an expert a trader/programmer test all the time frames and sometimes use MTF, that's the easiest part on making experts.
There are strategies that works well on the higher time frame and others that works well on the 1 min chart .
its up to the trader/programmer to decide which one is more profitable for him and works better for his trading style.
In engineering we learn Never say Never .... so if your happy with the HTF others are more happy with the LTF
hi
it depend on your trading styles , TF < 1 H ussualy use by scalper to take only few pips with many trading volumes .
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Forex Indicators Collection
Here is a very good reading about which time frame to choose for trading:
Stochastic Volatility
The other idea we will outline this time is stochastic volatility. If you use a nice charting tool such as those found in TradeStation etc and in the IG-Index Java trading platform, everyone will have noticed that as you look at the same FX pair at different time-frames, the series looks very noisy at some resolutions and much nicer and smoother at others. The smoothness does not just increase with timeframe -- I have seen the GBPJPY look pretty horrible at M1, M3, M5, M10 then look really nice at M15 but then go back to pretty nasty at M30, H1. This behaviour is due to a phenomenon called "volatility clustering". Folk who recommend trading using charts on multiple time frames are (whether they realise it or not) exploiting this property and it is a good idea. The amount of actual information, of course, increases as the resolution falls -- if you have the M1 data you can easily reconstruct the M3, M5, H1, H4, ..., etc data, but if you only have the H4 data you can't recover the information at finer time scales. However, the "mutual information" is quite different (we touched on this much earlier in this thread). If you compute the Shannon Mutual Information at different timescales, you will see that the curve has dips (actually peaks, but I use an algorithm that computes things upside-down for reasons that don't concern us here). What are we looking for here? We want to find something we can actually trade!! We want a genuine trend we can latch onto and avoid the dangerous shoals of false trends and ranging markets.
Think of this in terms of a communication system. The transmitter can send either a 1 or a 0 and the job of the recevier is to decide whether a 1 or a 0 was sent. (This is an accurate description of any modern digital comms system, eg, mobile phones). The radio channel adds noise and randomly affects the signal, sometimes changing 0's into 1's and vice versa. If the channel is noise free and we always receive a 1 when a 1 was sent (same for 0) then everything is great. You might think the worst case would be a very noisy channel that always changes 0's for 1's (and vv). But this is easy to handle too -- just invert everything at the receiver! The worst case is actually the channel where 1's are changed to 0's randomly so the receiver can no better decide what symbol was sent than by tossing a fair coin! In digital comms systems, we use powerful "error correcting codes" to code the information prior to transmission to combat the effects of the radio channel, whose properties are quite well known in advance.
So in our trading system, if we have our FX data at a given timescale whose mutual information is close to 0.5, we can no better decide whether to buy or sell (go long or short) than by tossing a coin. WE CANNOT TRADE THIS INSTRUMENT AT THIS TIMEFRAME!! However, if we find a timeframe where the mutual information is biased away from 0.5 (either up or down) then we are in with a statistical chance -- we have an edge and that is all we need. We do not need to win every battle so long as we win the war!! You will have seen from the equity curves of my robot that he is by no means always right, but that overall the equity curve is inexorably upwards!
Daily chart
As i beginner in forex i can see that the daily and weekly chart are the most reliable to make a decision long or short.
But what a fail to understand is how can a trader effort so much noise in the 1min and 5 min timeframe? Because price goes up and down like crazy and the margin you must have is (especially if you buy 5 or 10 contracts). Can someone make it clear to me.
As i beginner in forex i can see that the daily and weekly chart are the most reliable to make a decision long or short. But what a fail to understand is how can a trader effort so much noise in the 1min and 5 min timeframe? Because price goes up and down like crazy and the margin you must have is (especially if you buy 5 or 10 contracts). Can someone make it clear to me.
My point of view is "adopt your chart to fit your style, not the other way round". Fast timeframes need different analysis, though many say "this strategy works on all timeframes". But you may have strategy, which works well on that noise (as you call it), but you should know the noise behaviour. You are supposed to have skills to review trades daily, and the advantage is, you would have plenty of material for your statistics.
As i beginner in forex i can see that the daily and weekly chart are the most reliable to make a decision long or short. But what a fail to understand is how can a trader effort so much noise in the 1min and 5 min timeframe? Because price goes up and down like crazy and the margin you must have is (especially if you buy 5 or 10 contracts). Can someone make it clear to me.
you have to be extremely accurate to be successful trading on a short time frame and daytrading in the forex market. the fact is it's logically not really possible to do. only long term as you said daily and weekly works