To continue some of our discussions on candlestick analysis, I wanted to talk about candlestick analysis on different timeframes. By nature, I am currently a daytrader using as low as 2000
VBC's on the ES, but there's MANY ways to apply candlestick analysis on different timeframes.
There's some arguments that I've read that candlestick analysis loses it's touch the lower the timeframe you go. And on the surface of that argument, I'd probably agree. As with anything though, you sometimes need to dig deeper than what meets the eye...
I hope to make this thread an ongoing look at candlesticks on many different timeframes and chart setups so that we can look at a variety of approaches...
30 MIN ES CHART
I start with a 30 minute ES chart b/c that is a chart that performing candlestick analysis on easy b/c you literally have at least 30 minutes to gear up for a trade.
That chart is from Wed, 8/29. So my question is... what candlestick patterns appear and how did they play out?
15 MIN ES CHART
Here's a 15 min of the same day. How does the picture change, if at all, by going to a timeframe that produces twice as many candles as the 30? Is that good or bad?
5 MIN ES CHART
And the 5 minute...
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I'll leave it at that for tonight.
What I hope you can see is that once you train your eyes to look for the candlestick patterns, the question then becomes on what timeframe and chart setup? And why?
There's no right answer as each of us has different risk tolerances and expectations of each trade. For example, if you trade the 5 minute with a reasonable profit target, I think you could make money. I also think that if you go for a 'reasonable' target on the 30 minute as you did with the 5 that you will probably lose money in the end. But then I would argue that the 30 minute trades *could* be a stronger trade than the 5...
Feel like this?
This is why trading is hard and why I believe candlesticks are so misunderstood and misused. Just taking a hammer is only one small sliver of the puzzle. All hammers are not created equal. You not only have to
recognize the patterns, you have to
figure out how you will use it, and after all that,
see if your conditions to enter a trade are even met to begin with! Oh yeah, and then manage the trade.
Now, before I scare newbies to candles off, keep this in mind - once you get your system flowing, all of those steps just happen. They become inherent in your trading and you just do it. It's a matter of if/when you get there. It takes time and A LOT of practice. But when you are there, it can be very rewarding in my opinion.
