You can spot winning price points in the stock market by identifying a tradable trend depending on your risk tolerance. Trends are short-term, medium-term, and long-term.
There are several time frames where markets thrive. In such case, there could be deviating trends within a certain security based on the time frame being regarded. It is just normal for a stock to be entangled in short-term and intermediate downtrends and still be considered inclusive of a primary uptrend.
Generally, neophytes in trading get stuck on a certain time frame, taking for granted the more robust primary trend. On the other hand, there are novice investors who trade the primary trend but undervalue the advantage of enhancing the entries for a short-term time frame.
As accepted by traders, more reliable indicators could be collected from the longer time frame. As you broaden the time frame, you will get more noises and false stance in your charts. As a result, you will be able to determine your trade’s primary trend by using a longer time frame.
Through identification of an underlying trend, you can use the time frame you chose and set the intermediate trend alongside a more expedited time frame to specify the trend for short term.
There are various situations wherein multiple time frames can be used. For instance, a swing trader concentrates on daily charts for decision-making. His strategy also utilizes charts per week to specify the primary trend. Lastly, swing trader also takes regard of charts every hour to identify a short-term trend.
Besides a swing trader’s preferences, a day trader represents the use of multiple time frames. He uses a 60-minute chart to identify the primary trend while trading off 15-minute reports. A day trader may also use a tick chart or 5-minute report to specify a short-term trend.
A trader eyeing for a long-term position may also put into use different time frames. He or she may give attention to weekly charts while considering monthly charts to determine the primary trend. To identify exit and entry points, a long-term position trader may apply daily charts.
Each trader has a selection of time frames to use depending on his or her preference. Most likely, you may select the main time frame you are interested in. Afterward, you can choose from the given examples and complement it with your main time frame.
Conclusively, you will be able to define the trend using a long-term chart, trading indicators using an intermediate-term chart, and refinement of entry and exit points by employing short-term chart. You can mitigate risks by not being caught up with too detailed charts, such as short-term time frames.