Thoughts on Trading Across Different Timeframes
A thought came to my mind with regards to the GBPJPY trade as per my previous post. I had entered the trade taking signals off the Daily chart and I had actually got freaked out by the price movements of it in the lower timeframes. In effect, I mixed the timeframes within the opening and closing of the trade. When you’re trading, if you’re taking signals of a particular timeframe, it is important to keep it consistent. Each particular timeframe has it’s own patterns.. in the smaller timeframes (5 or 15 mins for example), the peaks and troughs of the particular price within the day are summarised by a candle in the Daily chart. It’s impossible to trade if you’re therefore mixing and matching timeframes to trade with..
It’s very easy to get it all mixed up. When you place your trade, you’ll have every intention of following it through but if you have a habit of looking at it, you may wonder what it looks like in all other timeframes. The problem is that our human brains always try and see things when there perhaps isn’t anything to see. Particularly in the small timeframes, you’ll see what looks like a lot of action as the market bounces up and down 10 – 20 pips or so. However, if you’re looking at Daily charts where each bar contains a good 100-200 pips of movement, the 10-20 pips really is nothing in the scale of things.
I write my thoughts down on the blog as they are lessons of reflection for when I look back on it and I hope that to readers, they offer the odd nugget of wisdom. The hope is that we’ll all become better traders as a result of it all. The journey towards becoming a successful trader is long and full of challenges but it’s a very satisfying one! Good luck!
