What speed should I use?
There's a new question in town. What speed should I use? A while ago I wrote something in which I pointed out the first question you will always hear from a newbie. "What Timeframe should I use?" You should give them credit for spotting the unanswered question in most educational materials for trading, no matter what the market. No one will give a straight answer because it gets way too complicated. The real truth of the matter is that there is no clear answer because the question is wrong. Most will already know the following basics, that timeframes are methods of grouping data into containers for display. These bars or candles have their features of open, high, low and closing values. Those are then used for basing indicator settings. OK so how does that relate to the 'question' being wrong? Very simple... the candle is a man-made vessel for displaying arbitrary amounts of data. This actually has nothing to do with markets. The market does NOT recognize a 15 minute bar, or ANY other size. There is NO rule, NO system, NO common denominator for the relationship of the close of one bar to the low of another (or any other combo), no matter what the size of container. Nothing that will hold up anyways, even though you may occasionally be able to get 'things that "work"'. So while collecting our data into bars is a convenience and even a necessity, it leaves out an obvious feature of markets. This feature and also the fibonacci relationships inherent in all tick data have been lost in the translation of what the market "says". So what is this "feature", so obvious, yet which we've been unable to see? Very simple... SPEED CHANGES. This stares us in the face every time we look at a chart and yet there is no mention of it. A momentum indicator or any other similar device, or a system which incorporates one into a 'method' will still suffer from the weakness of not taking the speed changes into account first, and instead, relying on the blind arbitrary candle to render the reading. Allow me to demonstrate how simple and obvious this is. The following chart has a 100 period Simple Moving Average on it, a fairly slow setting, especially in volatile forex.
The area in the tan elipse has the MA wobbling through it, getting turned easily. The area in the gray is quite obviously running at a different SPEED! It's faster. What accounts for the speed change, what speed IS it, and where or when or how is it determined? In other words, "What SPEED should I use"? The market set the speed for the faster area inside the tan area. This was the setup for a 5000 pip run (it all couldn't fit in that pic and show what I needed to demonstrate and the 100 SMA had nothing to do with the trade). However the measurement of speed produces great results. This actually gets done to prepare for exhaustion analysis, then pullback analysis, then again after the trade is put on to check for slowing or growth which indicates a continuing run. Even the terminology gets to be a problem since the feature so obviously present has no language because it previously had no recognition. Language aside, however there are mechanical steps to locate the "tells". Resulting signals come out of them such as this: 
Not the red check but the trigger on that purple indicator. Now I can imagine that when someone sees the pictures I have which show these indicators catching the supertrend's reversal on the retracement, they may think that this is ONE standard indicator like they are used to using. It is not. Each one is different and the market has told us which one to use. It has also told us on which timeframe to use it. The combination of settings and timeframe is "SPEED" of analysis. So therefore the appearance may be that these are just some cherrypicked location where the indicator has coincidentally wrapped around favorably and the picture is snapped. But the reality is that these are cherry picked by the market. The settings are handed to us. What is the first question you hear from a newbie? "What Timeframe should I use?" Answer: If that is all you do is choose timeframe, it won't matter. The results will be statistically similar to the results of traders as a group in any market. It isn't pretty. 
I am impressed with the thoughtfulness of this article. This is something new.
I do personally believe the timeframe you choose is parallel to how much free time you have.
For a working adult, Daily timeframe is God-Given..
For a self-employed, he could even trade 1 min if he wants.. 
I am impressed with the thoughtfulness of this article. This is something new. I do personally believe the timeframe you choose is parallel to how much free time you have. For a working adult, Daily timeframe is God-Given.. For a self-employed, he could even trade 1 min if he wants..
Hi Jenny,
Yes it is entirely new - amazing how we can stare at charts so long - YEARS in my case, and not 'see' what is actually happening.
That is correct what you say - that a daily timeframe is a sort of standard. Certainly the number "1" is a significant player.
However the number of other choices for speeds that a move can choose is high. That really reduces the odds that any analysis will be consistent. That is what the problem is with repeatability for analysis.
Unless the speed is reckoned with first there is no technique that can decipher what any reading of indicators "means" or is saying.
Basically you have to de-containerize (undo the effects of arbitrary bulking of data) - then measure with speed taken into account - before ever applying the analysis or interpretations.
Never covered before but always overlooked.
Most experienced traders deal with the let down they
get from Technical Analysis (TA) through strict
discipline never knowing there is a root cause.
It's hard to know how to address because there is
a huge gulf between the newbie and the well heeled
trader. But there is this one topic which has not
EVER been covered before that IS every trader's.
I was going to write this in a book but it
seemed better that it be in video form so
please see this.
NEW YOUTUBE VIDEO: The Trouble with Today's Technical Analysis
If there is one video that every person who calls
themselves a trader needs, yes, needs to watch it
is this one. Why? This has not EVER been covered.
Hope it makes you sit up and take notice.
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There's a new question in town. What speed should I use?
A while ago I wrote something in which I pointed out the first question you will always hear from a newbie.
"What Timeframe should I use?"
You should give them credit for spotting the unanswered question in most educational materials for trading, no matter what the market.
No one will give a straight answer because it gets way too complicated. The real truth of the matter is that there is no clear answer because the question is wrong.
Most will already know the following basics, that timeframes are methods of grouping data into containers for display. These bars or candles have their features of open, high, low and closing values. Those are then used for basing indicator settings.
OK so how does that relate to the 'question' being wrong?
Very simple... the candle is a man-made vessel for displaying arbitrary amounts of data. This actually has nothing to do with markets. The market does NOT recognize a 15 minute bar, or ANY other size. There is NO rule, NO system, NO common denominator for the relationship of the close of one bar to the low of another (or any other combo), no matter what the size of container. Nothing that will hold up anyways, even though you may occasionally be able to get 'things that "work"'.
So while collecting our data into bars is a convenience and even a necessity, it leaves out an obvious feature of markets.
This feature and also the fibonacci relationships inherent in all tick data have been lost in the translation of what the market "says". So what is this "feature", so obvious, yet which we've been unable to see?
Very simple... SPEED CHANGES.
This stares us in the face every time we look at a chart and yet there is no mention of it. A momentum indicator or any other similar device, or a system which incorporates one into a 'method' will still suffer from the weakness of not taking the speed changes into account first, and instead, relying on the blind arbitrary candle to render the reading.
Allow me to demonstrate how simple and obvious this is.
The following chart has a 100 period Simple Moving Average on it, a fairly slow setting, especially in volatile forex.
The area in the tan elipse has the MA wobbling through it, getting turned easily. The area in the gray is quite obviously running at a different SPEED! It's faster. What accounts for the speed change, what speed IS it, and where or when or how is it determined?
In other words, "What SPEED should I use"?
The market set the speed for the faster area inside the tan area. This was the setup for a 5000 pip run (it all couldn't fit in that pic and show what I needed to demonstrate and the 100 SMA had nothing to do with the trade).
However the measurement of speed produces great results. This actually gets done to prepare for exhaustion analysis, then pullback analysis, then again after the trade is put on to check for slowing or growth which indicates a continuing run. Even the terminology gets to be a problem since the feature so obviously present has no language because it previously had no recognition. Language aside, however there are mechanical steps to locate the "tells".
Resulting signals come out of them such as this:
Not the red check but the trigger on that purple indicator.
Now I can imagine that when someone sees the pictures I have which show these indicators catching the supertrend's reversal on the retracement, they may think that this is ONE standard indicator like they are used to using.
It is not. Each one is different and the market has told us which one to use. It has also told us on which timeframe to use it.
The combination of settings and timeframe is "SPEED" of analysis.
So therefore the appearance may be that these are just some cherrypicked location where the indicator has coincidentally wrapped around favorably and the picture is snapped. But the reality is that these are cherry picked by the market. The settings are handed to us.
What is the first question you hear from a newbie?
"What Timeframe should I use?"
Answer: If that is all you do is choose timeframe, it won't matter. The results will be statistically similar to the results of traders as a group in any market. It isn't pretty.