Time frames
Time frames are probably more important than most people give them credit for. First, it is the time frame that determines our “comfort zone” in trading. Second, it is our “workspace” that we base all our trading decisions off.
Many new traders don’t understand the “higher order” of time frames and forever suffer frustration not knowing why. Each time frame is governed or “controlled” by the next higher time frame. Since we trade the Daily, which is our workspace, we will start there.
The Daily is governed or controlled by the Weekly, which I call the BOSS. As long as we only trade from the Daily, then these two are all we really need. We can look at the Monthly for a longer, further out view, but as regards our trading decisions on the Daily, since the Monthly is two time frames higher (and controls the Weekly), we can disregard this.
Each time frame consists of waves or cycles or whatever name you want to give them and WITHIN those waves or cycles are smaller waves or cycles – these are our smaller time frames. So when you look at a BOSS chart you can see the large, major swings. Within those large, major swings are smaller swings – these are our Daily swings. From this, you should now understand that the BOSS controls EVERYTHING the Daily does. (Within the Daily swings are smaller swings which are your H4 swings).
This means that a BOSS swing controls several Daily swings.
If you have understood everything so far, you should realise that the BOSS support and resistance levels are those which the Daily moves up and down against. These then are MY major support and resistance levels. I qualify it as “MY” because they may not be the same as another trader’s major levels.
A BOSS bar consists of 5 Daily bars if the penny has still not dropped.
Hopefully this will help you understand why you cannot use information from a lower time frame to trade the higher time frame. For example, you cannot use support and resistance levels from H4 to trade the Daily since there are 6 H4 bars in a Daily and as many swings meaning that eventually you will be stopped out mid – bar. It is OK to find an entry on a lower time frame AFTER first identifying the opportunity on the Daily, PROVIDING you go back to trading the Daily.
If you want to find really strong, powerful levels of resistance and support, then pull up a Monthly chart and where the Monthly levels coincide with the Weekly levels is where you will find super powerful major, major support and resistance. If you do this, do not draw other lines in as you will end up with more horizontal lines than price bars!
The higher order of time frames also tells us that the higher the time frame, the more reliable, accurate are price action and technical analysis. So, a hammer on a BOSS chart is very meaningful and if you look back on your charts, you will see that many huge moves have come off these bars.
The higher time frames are easier to trade because there is less “noise” and trends are longer BUT you need very large accounts to handle the Stop Loss levels.
The one area which is not black and white (to me) is during a trend change. I struggle all the time with inter – time frame trend changes as I sometimes think the Daily has to change before it’s BOSS does. However, when I look in detail, it can be seen that the BOSS has changed first. The trick is to know what the immediate trend is or the momentum of the last couple of bars.
There is much more to time frames than this but this should be sufficient to help you along your way.
Rock n Roll,
Strat
Time frames are probably more important than most people give them credit for. First, it is the time frame that determines our “comfort zone” in trading. Second, it is our “workspace” that we base all our trading decisions off.
Many new traders don’t understand the “higher order” of time frames and forever suffer frustration not knowing why. Each time frame is governed or “controlled” by the next higher time frame. Since we trade the Daily, which is our workspace, we will start there.
The Daily is governed or controlled by the Weekly, which I call the BOSS. As long as we only trade from the Daily, then these two are all we really need. We can look at the Monthly for a longer, further out view, but as regards our trading decisions on the Daily, since the Monthly is two time frames higher (and controls the Weekly), we can disregard this.
Each time frame consists of waves or cycles or whatever name you want to give them and WITHIN those waves or cycles are smaller waves or cycles – these are our smaller time frames. So when you look at a BOSS chart you can see the large, major swings. Within those large, major swings are smaller swings – these are our Daily swings. From this, you should now understand that the BOSS controls EVERYTHING the Daily does. (Within the Daily swings are smaller swings which are your H4 swings).
This means that a BOSS swing controls several Daily swings.
If you have understood everything so far, you should realise that the BOSS support and resistance levels are those which the Daily moves up and down against. These then are MY major support and resistance levels. I qualify it as “MY” because they may not be the same as another trader’s major levels.
A BOSS bar consists of 5 Daily bars if the penny has still not dropped.
Hopefully this will help you understand why you cannot use information from a lower time frame to trade the higher time frame. For example, you cannot use support and resistance levels from H4 to trade the Daily since there are 6 H4 bars in a Daily and as many swings meaning that eventually you will be stopped out mid – bar. It is OK to find an entry on a lower time frame AFTER first identifying the opportunity on the Daily, PROVIDING you go back to trading the Daily.
If you want to find really strong, powerful levels of resistance and support, then pull up a Monthly chart and where the Monthly levels coincide with the Weekly levels is where you will find super powerful major, major support and resistance. If you do this, do not draw other lines in as you will end up with more horizontal lines than price bars!
The higher order of time frames also tells us that the higher the time frame, the more reliable, accurate are price action and technical analysis. So, a hammer on a BOSS chart is very meaningful and if you look back on your charts, you will see that many huge moves have come off these bars.
The higher time frames are easier to trade because there is less “noise” and trends are longer BUT you need very large accounts to handle the Stop Loss levels.
The one area which is not black and white (to me) is during a trend change. I struggle all the time with inter – time frame trend changes as I sometimes think the Daily has to change before it’s BOSS does. However, when I look in detail, it can be seen that the BOSS has changed first. The trick is to know what the immediate trend is or the momentum of the last couple of bars.
There is much more to time frames than this but this should be sufficient to help you along your way.
Rock n Roll,
Strat
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