If you’re daytrading the DAX, what’s the best timeframe to use? Do you always want to use a short timeframe?
Hey a very good evening to you.
If you’re day trading and market what is the best time frame to use? Now it sounds like a bit of a trick question because if you’re day trading the market you want to use a very short time frame because you want to see every single candle, you want to know what’s going on. But actually you know what? I don’t think it’s as simple as that.
You’re actually better off using a variety of different time frame’s let’s use the DAX as an example, it’s a great trading vehicle, something that I’ve traded for many years.
I keep coming back to it, I traded very activity during 2008 and I are not so much in 2003 but more in it 2008/9 I came back to it. I’m always watching it, I look at every day to see what’s going on.
It’s a great day trading vehicle along with some of the other indices but let’s just use this as an example.
Okay first of all the first thing we’re doing is looking at the daily chart. Where are we on the daily chart? So if you’re using this as an example we’re going to say “ok I know that we’ve got a bit of resistance up here and I know that that’s something I’ve got to be aware of” that is the immediate thing, that’s where you are in the vicinity of the day.
If you’re coming to this market tomorrow that’s the not main area, yes you’ve got some below but the chances of it moving down 400 points in a day are pretty slim so that’s your job done on your daily chart. You look at any set its a range, that’s a really key level that high level, if we break that then things are going to get more interesting.
Then you just move down to something like an hourly timeframe chart. You look at your hourly, I always like to put, to see what each individual days doing (btw this is not just the cash session of the DAX it’s is the whole morning up to the closing bell, and afternoon as well. It’s a personal preference I like to look at both to get a feel for what’s going on.
I look at that one hour chart i can immediately see some more things, i can immediately see that here is a big key level here it was a big support for one, two, three, four days and it may well become resistance again if we can get a push back up to that level at some point which is not unfeasible. Then that will be a level that i’ll be looking at tomorrow if i were to be trading this, and actually it will be well within the expected daily range of the DAX and that’s something else is very important if you’re day trading a specific index or specific products doing specific market you should know that market inside and out.
We’ll do that another video let’s just talk a little bit about the charts in this one.
Another thing i’ll be looking at is saying “listen I can visually see that we’ve got some support here, and you know what you’ve been prepared for it…. ok it was what it was back several weeks ago but it came into play today and if you are trading it today, and you were looking at that market you were prepared which you would not have seen if you’re just looking at five minute chart or a one minute chart. You know where that level is and it becomes key level as you’ve seen today.
So we’re ready we’re starting to build a bit of a framework. Then I want to go to a 15 min, an hourly and a 15 are very very similar but for me a 15 I can put a few more days on but I get a little bit more of a little more interesting depth of what’s happened the past few days with the past week. But you know what it is there’s no right or wrong, it just depends on getting all the information that you need.
You know if you were in fresh territory above new highs you’re not going to need to put an hourly chart up because you know full well that last week we were well above new highs in fresh territory.
It’s just getting all the information you need as quickly as you can and being prepared for market conditions.
So now I have a 15 minute chart, it starts to open up a little bit more information and you know what when I look at it I think actually a five minute chart is going to be better here because of the situation in so i moved to five because i just want to see exactly what’s going on.
Okay five minute chart, you can start to see a little bit more clearly now what’s going on.
Now I can see is a really big level here, i’m gonna knock that down it’s not as big as some of the daily levels that we’ve got but it’s a key level from the prior day, and we just touched it when in after-hours now so that then becomes something I’m looking at, then I start to say to myself; “well actually, you know what…..we’ve got pretty big gap from here to there”
I’m starting to build a bigger picture, now I’ve got those levels now I’ve got a picture of what’s going on….ok I’ll go back to my one minute.
Ok then so what I’ll do is, if i’m looking to trade I’ll only look to get involved with the market at the open if it’s particularly active. Then at the low, at the high, at the prior day’s low, at the prior day’s high and at those key levels that we marked off. That way you’re not getting involved in any chop intraday, just trying to avoid that lunch time window, just looking for those sweet spots where there is going to be some good action. You’re either going to get breakthrough these levels or you are going to get a reversal.
So to recap:
the open, a good hour at the open maybe half an hour.
the prior day’s close
the prior days highs
the prior days low
the current high
the current low
That gives you a nice framework to work around, you can focus on trading around those levels and avoid the chop……..anyway take care guys. Good trading!