Daily Charts Are Meaningless...

[Dogpile 10]

I stopped using daily charts a while back and must say -- its been a really nice adjustment.

 

In a nutshell, daily charts give you a bias that you just shouldn't have.

 

Admittedly, I do use info from the last 2-4 days but for that I do not need a daily chart -- I can use 15, 30, 60 and 120-mins charts just fine to get the pertinent information.

 

I think there is some use in weekly charts -- but daily charts have been rendered meaningless by too many people using them --- just my opinion ---discussion/agreement/disagreement welcome...

 

Set yourself free and don't even look at a daily chart.

[brownsfan019 17]

Dog,

In context of an active day-trading setup, I agree 100%. This was part of the discussion I was having with BlowFish in another thread. I agree with you completely b/c you hit the nail on the head - you could get a bearish 'feel' from the daily, pass on all long trades, and depending on how you trade, those could be very profitable trades.

 

Obviously as a swing trader, the daily/weekly, etc. are incredibly important. But as a day trader (one who does not hold positions overnight), I think the daily, weekly, etc. are useless. And the main reason is that throughout the day, there's plenty of opportunities to go short or long and to eliminate those b/c of a bias you have off the daily does not work for me.

[Minetoo 10]

I concur, the only thing daily I use is pivots. The greatest difficulty one must overcome is to trade what you see not what you think or believe.

[james_gsx 16]

Of course for intraday positions they really don't do you much good. But they give you a feel for the market, at least for me. I feel more "in tune" with the market if I know where it's been and where I feel it's going. Of course that doesn't make me biased on where to place my trades, but I like to have a heads up.

[brownsfan019 17]

Of course that doesn't make me biased on where to place my trades, but I like to have a heads up.

 

James,

If you can ignore the daily or weekly feel and still daytrade, I say more power to you. I find that if I see a long or just feel bullish looking at the daily or weekly, I have a much harder time taking shorts intra-day.

[ant 10]

I stopped using daily charts a while back and must say -- its been a really nice adjustment.

 

In a nutshell, daily charts give you a bias that you just shouldn't have.

 

Admittedly, I do use info from the last 2-4 days but for that I do not need a daily chart -- I can use 15, 30, 60 and 120-mins charts just fine to get the pertinent information.

 

I think there is some use in weekly charts -- but daily charts have been rendered meaningless by too many people using them --- just my opinion ---discussion/agreement/disagreement welcome...

 

Set yourself free and don't even look at a daily chart.

 

Huh? In another thread, you mentioned that you use the Taylor Technique for your daily bias, but you don't use a daily chart? I think a daily chart and Taylor go hand-in-hand.

 

Personally, I rely on the daily chart for "bigger picture" stuff - to identify balance areas and other key levels that higher timeframe traders/investors may be looking at (especially confluence areas where levels from the daily and intraday charts line up). It's when multiple timeframes come together that you get really dynamic moves. I also examine the weekly and monthly charts, but they aren't as granular as the daily chart.

[Dogpile 10]

<<I think a daily chart and Taylor go hand-in-hand. >>

 

I actually do use a daily chart for the Taylor stuff --- busted... but taylor bias only uses last few days (generally 4 days) -- and looking at a daily chart is tough not to get some overly bullish or bearish bias that extends back further than 4 days... if you are a short-term trader, it is very easy to get a bias looking at a daily chart which might show the last 60-100+ days of trading -- a time-period that has cost me money over the years -- so I try to just block it out best I can and focus on lining up the last 2-4 days and the intradays...

 

I do see some use in weekly charts actually for bigger picture stuff -- I just think the daily timeframe is the most difficult timeframe of any to make money from looking at... classic MACD & MACD histogram, 3/10 oscillator, ADX, stochastics are all (more than) useless on the daily timeframe, in my view... will often just lead you to a bias that will lead you astray...

[ant 10]

So it sounds like you don't require much from the daily chart - you only need to determine the Taylor bias off of the last few daily bars. That makes sense to me. However, it's not clear why the weekly charts would help you when the daily charts do not, beyond the last few bars. That is, how do the weekly charts affect your trade decisions? Also, why wouldn't you use the trend in the daily chart to increase your trade size when price moves in that direction in the lower timeframe charts (i.e., the one you trade off)? This doesn't mean that you can't take countertrend trades (scalps) relative to the daily chart though. I hope I don't appear to presumptuous with my questions, I just want to better understand your position on daily/weekly charts.

 

EDIT: The trend in the daily chart is also important to the Taylor Technique; for example, if the market is in a trend according to the daily chart, you will often tend to get two buy days or sells days or so instead of one. That is, the swing cycle is shifted.

[Dogpile 10]

<<why wouldn't you use the trend in the daily chart to increase your trade size when price moves in that direction in the lower timeframe charts (i.e., the one you trade off)? >>

 

I guess what I was trying to say but didn't come out and say was --- I have a slight bias towards fading any trend that develops on a daily chart. I don't believe in sustainable trends on the daily chart -- I believe in choppy daily action...

 

Now, don't get me wrong -- I DO believe in trends on intraday charts so I will take full size for an intraday trade even if it lines up with a daily trend --- having said that I want to fade the daily trend. So effectively, the daily just has no bearing on my trading.

 

<<how do the weekly charts affect your trade decisions? >>

 

they don't currently. But when stepping out to this timeframe -- the indicators seem to want to speak to me. always playing around -- check this one out (buy weekly macd histogram upturn that occurs during traditional seasonal strength for second half rally --- sell Jan 31st):

 

http://bp1.blogger.com/_5h-SWVGx6Ms/RtpeUx72PHI/AAAAAAAAAZs/r0h8QTBaKho/s1600-h/MDY+Seasonal+MACD.bmp

[Anonymous 11]

<<why wouldn't you use the trend in the daily chart to increase your trade size when price moves in that direction in the lower timeframe charts (i.e., the one you trade off)? >> ..........

 

 

 

Suppose I trade 3 contracts on a trade if it is in tune with the daily chart. That is, for example, the daily trend is up so I trade 3 contracts when going long. On a short signal I only trade 1.

 

1. Subconsciously I have told myself to trust my long signals 3 x's as much as my shorts. Conversely, I have told myself to distrust my short signals in such a way as to trade 1/3 the position.

 

2. If I am 1/3 less confident in my short signals, why am I taking them at all? If I believed it to be a good trade, then it should not be relocated to a lesser position size. Hence I have already added a negative bias to my trading and a self-fulfilling prophecy.

 

3. If you can't trade with the same size on both signals, why trade the lesser one? You are setting up a hierarchy for trade signals. But why trade anything less than the top of the ladder? Need more trades, or more money? TRADE MORE MARKETS. And trade them only in the direction of the trend.

 

This is the problem, form my point of view with using a daily chart to trade smaller timeframe intra-day. If you believe that trend is one of the small edges afforded the retail trader, it makes little sense to go short when the daily trend is clearly up.

 

But we know that an up trend can have down days. It can have down weeks for that matter. It takes away ones ability to make money if he is only trading on the side of the daily trend. Movement is important and that movement can be counter to the larger daily trend and still be tradable.

 

I prefer to keep my trend-frame small: 15 mins. and my trade-frame smaller: 5mins. I can thus trade counter to the larger daily trend, while still acknowledging the power of trends and fractal market structure.

 

As for the daily chart, its use in intra-day trading should be confined to support/resistance levels.

[ant 10]

Suppose I trade 3 contracts on a trade if it is in tune with the daily chart. That is, for example, the daily trend is up so I trade 3 contracts when going long. On a short signal I only trade 1.

 

1. Subconsciously I have told myself to trust my long signals 3 x's as much as my shorts. Conversely, I have told myself to distrust my short signals in such a way as to trade 1/3 the position.

 

2. If I am 1/3 less confident in my short signals, why am I taking them at all? If I believed it to be a good trade, then it should not be relocated to a lesser position size. Hence I have already added a negative bias to my trading and a self-fulfilling prophecy.

 

3. If you can't trade with the same size on both signals, why trade the lesser one? You are setting up a hierarchy for trade signals. But why trade anything less than the top of the ladder? Need more trades, or more money? TRADE MORE MARKETS. And trade them only in the direction of the trend.

 

This is the problem, form my point of view with using a daily chart to trade smaller timeframe intra-day. If you believe that trend is one of the small edges afforded the retail trader, it makes little sense to go short when the daily trend is clearly up.

 

But we know that an up trend can have down days. It can have down weeks for that matter. It takes away ones ability to make money if he is only trading on the side of the daily trend. Movement is important and that movement can be counter to the larger daily trend and still be tradable.

 

I prefer to keep my trend-frame small: 15 mins. and my trade-frame smaller: 5mins. I can thus trade counter to the larger daily trend, while still acknowledging the power of trends and fractal market structure.

 

As for the daily chart, its use in intra-day trading should be confined to support/resistance levels.

 

Aligning trades using multiple timeframes increases the probability of a trade versus taking a scalp trade that may be based on a single timeframe only. Why would I take a scalp trade or a less probability trade? Because based on research, the scalp trade may still have an edge, but it may not be as high as a trade that is taken with the longer timeframe trend. So I adjust trade size to compensate. For example, I would expect more profits from a trend day down that is with the longer term trend than a trend day down that is against the longer term trend. Anytime trade conditions and a trader's odds improve, whether it is by using multiple timeframes or because of increasing market volatility, for example, I will step up the leverage in my trading. I believe that knowing when to use more leverage is an important skill used by professional traders. It's sort of like doubling down in Blackjack when the odds are more in your favor. During the month of August, I definitely increased my trade size in general because of increased volatility. Increased volatility generates more profitable trades for me so I acted accordingly. I increased trade size within my risk parameters. I'm glad I did because August was my most profitable month this year thus far. I definitely operate from the point of view that most of my profits come from a few trades. How you use the daily charts is dependent on your trade plan, my point was that using the daily chart is usually advantageous, unless you are a scalp trader that only uses order flow. I use the daily charts to determine short-term to intermediate-term market condition and for support/resistance levels. But there are many other ways that it can be used profitably. For example, Dogpile uses the daily charts with the Taylor Technique. To each his own. There is no right or wrong way here. My point was that for most traders, the daily chart should be consulted.