Choosing the right time frames is a core part of trading the Emini – and this video breaks down exactly why I use the daily, 135-minute and 45-minute charts together.
[Note: This video was originally recorded on 2 September 2013.]
Labor Day in the US, so a little time off trading. Hope you’re having fun. I wanted to respond to this question about the significance of the daily, 135 minute and 45 minute charts from Hamid:
Hello Barry, I noticed in your last blog video that you have used Daily, 135 minute and 45 minute charts. Is there any importance of these timeframes?
Hamid
Alexander Elder’s classic Trading for a Living introduced me to the idea of Multiple Time Frames. He used a ratio of 4 or 5 between his time frames (daily, weekly & monthly). In my trading I prefer to use a factor of 3 – because the signals develop quicker.
The daily chart is a must, to see the big picture. Trends and cycles on that time frame give the overall market direction. Then to zero in and anticipate trend changes use the lower time frame charts. There are 405 minutes in an Emini day trading session – so 1/3rd of that is 135 minutes. Then 1/3rd of 135 minutes gives 45 minutes.
So that’s my reasoning for using the daily, 135 minute and 45 minute chart combination.
Of course, markets are fractal and so you’ll see the same trend and cycle patterns develop in all markets and all time frames. Whether it be the 500 / 1,500 / 4,500 tick chart combination that I use for day trading or a 9 / 27 / 81 minute chart combination, for example. Understanding time frames also helps you anticipate where the professionals run stops. And that context is especially important when identifying small range days to avoid. If you trade NQ, YM, TF or other non-ES contracts, the chart settings for those futures walks through the specific tick and time frame adjustments for each market.
