Shouldn't a good price action system work on all time frames? | Forex Factory

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Shouldn't a good price action system work on all time frames?

  • #1
  • First Post: Apr 23, 2009 8:37am Apr 23, 2009 8:37am
I hear a lot of people say they avoid lower time frames due to all the "noise". Fair enough, news can cause spikes and moves can happen so quickly there is little time to prepare for them. However, glancing at charts from different time frames, I see the same candle patterns and general price action occuring on each. In fact I wonder how many people can actually tell the difference between a chart from one time frame and one from another if it weren't labeled?

Anyway, my question is this. Ignoring the spread for the moment, shouldn't any system work just the same on any time frame?

Please share your thoughts.

P.S. Here's a test. Two charts of the same pair from different time frames. At a glance, can you guess what pair and what time frames?
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  • #2
  • Apr 23, 2009 8:50am Apr 23, 2009 8:50am
as a "general" answer, they "should" or at least thats the theory.

what i have noticed VERY often is we will get reversal candles formed on the lower timeframes which turn out to be completely false, which is the reason for my use of indicators and chart overlays instead of the candles.

i "think", since candles and indicators are nothing more than different ways to represent price action (NOTHING happens unless the price moves !) that candles simply do not form well enough for very accurate appraisal in the lower timeframes.

we use support and resistance, and in that manner do not pay much attention to real or false signals, be they candles OR indicators --- if one knows the TREND of the lower timeframes, unless there is "something" that suddenly comes up to alter that trend, you can map out the trends support and resistance values and use them completely to your advantage, and the way of learning this takes no time at all.

For the longer timeframes, because of the much longer time the candle is forming, the candles and indicators appear to react in the same ways !

enjoy and trade well

mp
  • #3
  • Apr 23, 2009 9:02am Apr 23, 2009 9:02am
Hi Bob,

you're correct, the smaler TF candles show the same "impulse" as the larger TF, but the difference is in the number of traders acting to create the impulse.

A 5 minute bar shows what traders are thinking, but only the traders who are "on the clock" during that 5 minute period, who aren't at lucnh, drinking coffee, or using the restroom . The same candle on the daily represents the actions of millions of traders all around the world, coming to an "agreement" on what price "should" do (each voting with their money).

Since the concensus is so much more widespread, the reaction is tremendously more likely. Patterns are only as important as traders think they are

Just my 2 pips


Seavo
  • #4
  • Apr 23, 2009 9:15am Apr 23, 2009 9:15am
Yes.

But...
On longer time periods the fundamentals come into account in greater power so Technical Analysis may fail more.

Generally, price action systems work on all timeframes, even 1M if the volatility is high enough.
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  • #5
  • Apr 23, 2009 9:29am Apr 23, 2009 9:29am
Quoting M256
Yes.

But...
On longer time periods the fundamentals come into account in greater power so Technical Analysis may fail more.

Generally, price action systems work on all timeframes, even 1M if the volatility is high enough.
fundamentals are shown through tech. but the opposite is not true action is not shown through fundamentals.

the higher the timeframe the increase in accuracy and efficiency in the trade.. the lower the time frame the less accurate and less efficiency in the trade but the more trades.

there are also different layers in the market that are effected by different things things that effect the 1M are immediate and that on the daily or weekly would be nothing but a studder in the market.

its not that most traders in scalping the lower timeframes fail because it doesnt work.. its the inefficiency in the trade.. and the non precision of their trading. inefficiency in the fact of how much capital they use to make how much profits and what the cost is to do that business.. Its easier to squeeze efficiency out of the higher timeframes..
  • #6
  • Apr 23, 2009 10:04am Apr 23, 2009 10:04am
while i can certainly agree with "non efficiency of the traders" scalping the one minute, are we speaking of GOOD traders or NEW traders ?

i can only say that for decent traders, a one minute chart is just a romp in the park --- im trading GU end EJ on the one and five right now, and EJ is a total gass --- set your tp and walk away !

agreed to more flips and dips and general "craziness" with the lower timeframes, BUT the support and resistance points are fairly well set in stone, with all the movement almost considerable as a "smoke screen" which is designed to cover up whats happening.

i dont know if i just SEE what is happening and have reinforcement by trading only with the trend, but scalping success rate can be considered outstanding, and i only see it as something very simple.

i do teach how to trade this way and were getting great results, but the whole basis is simply moving with the trend, being aware when the price direction changes, and trading in that manner.

i just love trading forex --- has a predictability that cannot be matched by anything short of trading the indexes.

enjoy and trade well

mp
  • #7
  • Apr 23, 2009 12:37pm Apr 23, 2009 12:37pm
Quoting mparker
while i can certainly agree with "non efficiency of the traders" scalping the one minute, are we speaking of GOOD traders or NEW traders ?

i can only say that for decent traders, a one minute chart is just a romp in the park --- im trading GU end EJ on the one and five right now, and EJ is a total gass --- set your tp and walk away !

agreed to more flips and dips and general "craziness" with the lower timeframes, BUT the support and resistance points are fairly well set in stone, with all the movement almost considerable as a "smoke screen"...

EJ is just soooo SEXY isnt it. if i could make love to a currency it would be the EJ so smooth and powerful.
  • #8
  • Apr 23, 2009 1:55pm Apr 23, 2009 1:55pm
Quoting bobsmith
Anyway, my question is this. Ignoring the spread for the moment, shouldn't any system work just the same on any time frame?
Yes! No buts....just yes.
  • #9
  • Apr 25, 2009 9:39pm Apr 25, 2009 9:39pm
Thanks to everyone for your comments.

I'm still curious though as to whether anyone can tell at a glance what timeframes the charts I posted above are. Obviously as jpgs, one can't plot moving averages or other indicators on them, but I'm wondering whether the general candles/patterns reveal anything specific to a long or short or timeframe.

Ok, hints. Both are EURUSD. One chart is a 100 tick chart and the other a considerably longer timeframe. Which is the 100 tick chart?
  • #10
  • Apr 25, 2009 10:11pm Apr 25, 2009 10:11pm
bobsmith

youve gotten your answer to the original question which is YES ----

its the real answer and there are NO other answers as those talking about "noise" obviously have either "heard" the word used and most definitely DONT trade the lower timeframes.

any one who DOES trade the lower timeframes would almost laugh at the simplicity of the answer, and as your charts show, WHERES THE BEEF ?

and wheres the "noise ?"

good golly miss molly --- they sure love to confuse !


Quoting bobsmith
Thanks to everyone for your comments.

I'm still curious though as to whether anyone can tell at a glance what timeframes the charts I posted above are. Obviously as jpgs, one can't plot moving averages or other indicators on them, but I'm wondering whether the general candles/patterns reveal anything specific to a long or short or timeframe.

Ok, hints. Both are EURUSD. One chart is a 100 tick chart and the other a considerably longer timeframe. Which is the 100 tick chart?
  • #11
  • Apr 26, 2009 4:55am Apr 26, 2009 4:55am
Quoting bobsmith
Thanks to everyone for your comments.

I'm still curious though as to whether anyone can tell at a glance what timeframes the charts I posted above are. Obviously as jpgs, one can't plot moving averages or other indicators on them, but I'm wondering whether the general candles/patterns reveal anything specific to a long or short or timeframe.

Ok, hints. Both are EURUSD. One chart is a 100 tick chart and the other a considerably longer timeframe. Which is the 100 tick chart?

well i was gonna guess eur.usd but u gave it away haha because it has the trending qualities of the euro without the Vol of the yen the bar sizes look to be on par with usd... i dont do ticks but i was gonna guess 15M and hourly or 4 hourly but i trade eur.yen so its a shot in the dark.
  • #12
  • Apr 26, 2009 10:02am Apr 26, 2009 10:02am
I tried to point this out a long time ago, imo there are only 2 reasons to trade a higher timeframe:

1- You are trading VERY large accounts and cannot get filled on a large trade size with a reasonable spread on the smaller movements of a lower timeframe meaning it increases your risk etc.

2- You are trading very small % of your account on a higher timeframe thus you have plenty of room and time for the market to move in your direction before you cash out and take your profits.

On a side note there is definitely NO such thing as market noise lol.
  • #13
  • Apr 26, 2009 10:37am Apr 26, 2009 10:37am
like your answers and definitely your signature ---- whats NOT to agree with ?

i could embelish the "reasons for using the higher timeframes" but aside from feeding the trolls, we both understand that the H4 is NOT the way to go if one is interested in QUICK returns.

market NOISE ----- mine is modern jazz ---- what do you listen to ?

LOL

thnx for the sanity of your explanation --- hope the OP stops with the tests and gets on with trading !

mp


Quoting fxRichard
I tried to point this out a long time ago, imo there are only 2 reasons to trade a higher timeframe:...
  • #14
  • Apr 26, 2009 11:12am Apr 26, 2009 11:12am
Thanks, my thought has always been that life is too short so why wait on hourly or daily timeframes etc. Get in and out quick , small timeframes move similarly to higher timeframes, jump in, if your wrong jump out don't wait for it to come back, if your right ride it as long as you can. Obviously easier said then done, with enough practice it's easy. Since low timeframes move similary to high ones what makes you think you will win on a high one if you can't on a low one?? It's not the market, it's you
  • #15
  • Apr 26, 2009 11:13am Apr 26, 2009 11:13am
Quoting mparker
market NOISE ----- mine is modern jazz ---- what do you listen to ?
mp
lol I prefer polka
  • #16
  • Apr 26, 2009 1:09pm Apr 26, 2009 1:09pm
ah, you HAVE to be a 15 second tick chart scalper then !


Quoting fxRichard
lol I prefer polka
  • #17
  • Apr 26, 2009 1:22pm Apr 26, 2009 1:22pm
Quoting mparker
ah, you HAVE to be a 15 second tick chart scalper then !
haha no really, house and rock
  • #18
  • Apr 28, 2009 7:28am Apr 28, 2009 7:28am
Just for the record, the second chart was a 100 tick chart of EURUSD. The first chart was a monthly of the same pair.

  • #19
  • Apr 28, 2009 7:36am Apr 28, 2009 7:36am
NO NO and NO!!!

A System should be deveoloped or atleast tweaked to work with and practiced and then used in that only.

To suggest anything else, would suggest that the market is random, which it isn't.
Nothing to it, but to do it!!! Stick to the plan FOOL!!!!
  • #20
  • Apr 28, 2009 8:21am Apr 28, 2009 8:21am
Quoting bobsmith
Just for the record, the second chart was a 100 tick chart of EURUSD. The first chart was a monthly of the same pair.
Thanks for the interesting approach. While I didn't guess it until you told us, a difference can be seen.
The second chart depends on trendline-based harami's (inside bars) to make most of its moves, which is kind of messed up, just like, in my opinion, a 100-tick (instead of 1-tick or 1 week, which each have legitimate bases for existing: 1-tick for every single trade, and 1 week for a definite beginning and end to every trading week.)
The monthly is crisper, with more plainly-seen triangles and smaller candles with shadows that allow for convex or concave trends.
The two charts also have inherent differences in their patterns, however immediately similar; this discounts the above to some degree.
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