Lower timeframes have more 'noise' : This I discovered from experience to be untrue. But how to attempt to prove it objectively?! Well, firstly, we could show professional traders a few charts and ask them to pick the 1M ones from the Daily ones. My guess is the result will be random, i.e. they won't be able to tell which is which. I know, this is just the imagined result of a non-existent experiment. Well okay then, I'll give you a real experiment. Aronson, in his book Evidence-based Technical Analysis, references the following paper: F.D. Arditti,...
First, I think it's kind of pointless to expect a chartist to determine the difference between M1 and say D1 charts with no reference to the key point that causes this "noise" issue on M1...that is scale. If you showed the price axis of the chart, then it would be pretty easy to differentiate high or low TF.
The question of randomness is a tricky one....and i guess it comes down to your personal belief about what governs the charts.
There are those that believe there is always some background reason or pattern that dictates what the price does. Then those (like me) who believe it extremely unlikely that there is any governing logic to the way price moves, and that with so many participants with different agenda's it can only best be described as a metagame. This of course is another debate, but by this logic it is probably accurate to say that if you showed any trader 2 pictures; one of real chart moves and one of random candles drawn, that most likely it would not be possible to differentiate the real from the fake. Anything can and will happen in the markets.
As far as "noise" goes...even though I tend to use the term...It's kind of misleading. As You say Alex, the moves and pattern formations are pretty much the same on the smaller TF's. The only issue comes with applicable trading practices.
Looking at say EU, as an example, simple peak and valley trend trading. On H1 you may get SL values of say 20+ pips depending on the time of day.
If you went to M1 most likely you could find excellent examples of peak and valley trades...but...SL distances of 3-10 pips if you're lucky. So...the frequency of trades and the number of reversals are I guess what is considered "noise" in this way. Not significant enough to be meaningful...whatever that is in FX!
And really, let's say you trade 1M charts...there would be little point looking for patterns, then setting your positions based on M1 price formations, using H1 levels.
To me, M1 trading is all about small SL distance, with expected higher RR...or as you say, fast in fast out higher frequency trades. Absolutely possible! But not so easy...and fairly stressful.
I agree..it's not accurate to say the small TF's are "unreliable" but it certainly is a very different game when you trade them.
Absolutely agree that pro traders use smaller TF's.
Unsure if you have ever caught this video :
Inserted Video
You can hear him talking about the number of pips he is looking at. He is apparently a MAM trader, so I searched for his Myfxbook pages and found them.
Have a look at this: http://www.myfxbook.com/members/FXVi...markets/960020
Also, you can see his other linked accounts at the bottom.
What I found fascinating is the average win of 7pips! I doubt he is trading H4 charts for this, but his results are still good.
Also..average loss of 37 pips!
My guess is, if you started any thread on this forum, and suggested a system with those average win and loss parameters you would be laughed at!
Food for thought.... (?)
Wealth comes from what you keep, not what you earn
