dennis mccain
  • Home
  • Investing
    • Dividend Kings
    • Div Aristocrats
    • Div Champions
    • Business Dev Cos
    • Monthly Dividends
  • Options
    • Weekly Options

Investing

Ideas and Strategies on Investing.

Previous Articles

Trading in Two Time Frames

9/6/2013

0 Comments

 
 Normally when I’m looking at a stock chart I’m looking at a chart of the daily activity of a specific stock. Each candlestick on the chart will represent a single day’s activity. This type of chart is referred to as a Daily Chart. That’s the time frame where I feel the most comfortable. It’s also the most common chart used by investors and is the easiest to find on the internet. The two websites I use most for looking at Daily Charts is StockCharts.com and FINVIZ. 

 But Daily Charts aren’t the only charts that I use. I also use Weekly Charts to get a longer range perspective on price and volume. Other investors use monthly charts, hourly charts and even minute charts, but I don’t use or have a need for those charts very often. Fortunately everything I know about Daily Charts applies equally to every other chart no matter which time frame it’s based on. I can use the same price and volume metrics and the same momentum indicators and oscillators. They’re applicable on any chart based on any time frame. It’s one of the nice things about technical analysis.

 For trading purposes I feel most comfortable trading with the Daily Charts. Monthly charts seem too glacial to me and I’ve never been interested in intraday charts because the volatility just seemed like random noise. Intraday charts always seem too erratic for me to get any solid confirmation signals. Intraday charts also are generally used by day traders and I’ve never been interested in day trading. If anything, I’m a swing trader for high beta stocks and a buy-and-hold investor for my core holdings.

 Whenever I use two different time frame charts of the same stock I rely on the longer time frame to identify the major trend as well as the major support and resistance levels. I use the shorter time frame chart as the basis for making the actual trade. Ideally I’d like my trade to be in sync with the two charts but I can only do this if the two time frames are in sync with each other. If both charts are showing an uptrend I want to be trading long. If both charts are trending down then I want to be trading short. By trading in sync with the two different charts my probability of completing a successful trade is greatly enhanced. However, if the two charts are out of sync then that’s a red flag for me and I have to ask myself if I really want to make that trade. I also check momentum indicators and oscillators to look for additional confirmation.

 The advantage of reviewing the longer horizon chart is knowing the bigger picture and seeing the overall longer trend. This not only gives me a clearer picture of the stock’s major trend but the knowledge can keep me from getting shaken out of a stock too early. This allows me to hold on to my successful trades longer for larger gains and reduces the number of trades I need to make and the number of commissions I need to pay.

 The two charts below are the Daily Chart and the Weekly Chart for AT&T. As you look at these you can see that price and volume are similarly plotted and momentum indicators and oscillators are applicable to both. On the weekly chart it’s easy to see the major trend as well as the major support and resistance levels. This is the kind of information that puts the Daily Chart in perspective when zeroing in on the correct direction for a high probability trade. 
Picture
AT&T Daily Chart
Picture
AT&T Weekly Chart
0 Comments



Leave a Reply.

    Print Friendly Version of this pagePrint Get a PDF version of this webpagePDF

    Picture

    Author

    I am an Individual Investor with specific interest in long term growth and then enhancing my returns with income from dividends and derivatives. I don't recommend stocks to anyone (it's a good way to lose friends) and no one reading this should misinterpret my blog as a recommendation for any type of investment. I am writing this solely for myself and my kids.


    RSS Feed


    Picture
    Top 100 Blogs for Dividend Investors

    Picture
    Follow Me on StockTwits!



    Dividend Growth Stocks
    Dividend Growth Investor


    Picture
    I'm on Seeking Alpha too!

    Archives

    August 2018
    July 2018
    June 2018
    May 2018
    April 2018
    March 2018
    February 2018
    January 2018
    December 2017
    November 2017
    October 2017
    September 2017
    August 2017
    July 2017
    June 2017
    May 2017
    April 2017
    March 2017
    February 2017
    January 2017
    December 2016
    November 2016
    October 2016
    September 2016
    August 2016
    July 2016
    June 2016
    May 2016
    April 2016
    March 2016
    February 2016
    January 2016
    December 2015
    November 2015
    October 2015
    September 2015
    August 2015
    July 2015
    June 2015
    May 2015
    April 2015
    March 2015
    February 2015
    January 2015
    December 2014
    November 2014
    October 2014
    September 2014
    August 2014
    July 2014
    June 2014
    May 2014
    April 2014
    March 2014
    February 2014
    January 2014
    December 2013
    November 2013
    October 2013
    September 2013
    August 2013


    ADDITIONAL RESOURCES:
    4 Month INDU Chart
    Dividend Ex-Dates
    Bidness Etc
    SharpCharts Voyeur
    StockCharts.com

    FINVIZ
    Seeking Alpha
    BDC Reporter
    Roadmap2Retire
    DivHut
    Dividend Growth Investor

    Dividend Yield

    Stock Market Mentor
    Chart Swing Trader
    Dividend Announcements
    IBD TV
    Stocks to Watch Today
    Dividend Detective

    DISCLAIMER
     I am not a licensed investment adviser, and I am not providing investment advise for you on this site. Please consult with an investment professional before you invest your money. Any opinion expressed here should not be treated as investment advice. I am not liable for any losses suffered by any party because of data or information published on this blog. Past performance is not a guarantee of future performance. Unless your investments are FDIC insured, they may decline in value.

    Picture
Powered by Create your own unique website with customizable templates.