DislikedPosts from earlier today stated that the candle formations from a 4-hour chart "trump" the candle formations on a one-hour chart and that the monthly chart trumps the daily and weekly charts. I guess I am a victim of backwards thinking and welcome comments regarding the following:
The reason a chart shows a blue/bullish monthly candle is because the corresponding weekly candles are bullish, and the reason a 4-hour candle is red/bearish is because the last few 1-hour candles are predominantly bearish. In other words, you would not have a bullish monthly candle if the weekly candles for that month were bearish. Same thing with a 1-hour candle: a red 1-hour candle is created from several red 15-minute candles. Therefore, could it be said that the lower timeframe candle formations "trump" the higher timeframe formations?
OR could both explanations/views be valid depending on one's trading style? In other words, the 15-minute candles will trump the 1-hour candles for a "scalper" whereas the monthly candle will trump the 4-hour candles for a "position" trader.
I am posting these questions because I would really like to hear other traders' views. It is not my intention to say that earlier posts are "right" or "wrong." Thanks in advance to anybody who takes the time to respond.
Happy trading. Let's all make some pips.Ignored
I like to analyze alot of timeframes and feel more confident when signals line up. Because of this, it may give me an edge of setting up on a lower timeframe near a key continuation or ending point of a larger move that will allow me to achieve a short term goal on part of the position, while at the same time aiming for that longer term goal on another part, but with the same risk. This is a tricky concept, and that is why I believe that people give longer timeframes more importance.
Alot of times, they see the reward side of the larger timeframes, but only allow themselves the risk amount suited for a much smaller timeframe, all the while entering on the signal of the larger timeframe. This causes many stops to be hit even when the analysis was good.
It is very easy to look back at a loss and say, I should have known because of the dailys, but in reality, everything grows from the bottom up. The dailys will give you a zoomed out picture of where it may be likely to be headed, but shorter timeframes will help give you a better understanding of the route it will take to get there. If your account size is suited for smaller risk, then knowing the different possible routes becomes very important. If the route it takes in this context is negligible to your account size, so much that it isn't worth taking the risk of better entry to lose the move if it happens quickly, well then you just enter on a confirmed signal on that timeframe, and perhaps pick up more if possible at a better price and go from there.
We do the same thing on short term basis. I am short GBP and know an area of minor support is coming up, I haven't reached my target. I do not exit at this minor support because the retracement means nothing to me in context of overall move. I wont get out because price may retrace 12 pips because if it doesn't, I just gave up my much larger reward capabilities. Multiply that scenario out a few times and that is why it is not worth it for large accounts to focus too much on intraday, especially if little to no leverage is being used.
Sorry for rambling
Man who scratches ass should not bite fingernails
till friday
