Stock Market Trading - Timeframes (A Quick Discussion)
- Rohit Musale, CFA
- 3 days ago
- 2 min read
Decades ago, Dr Alexander Elder, wrote a book:
"Trading for a Living"
In this book, he spoke about:
The Triple Screen Trading System
He spoke about the:
- Tide
- Wave
- Ripple
which correspond to:
- Long Term
- Medium Term
- Short Term
timeframes.
More specifically he said that,
these timeframes differ by a factor of 5.
Example:
If,
Tide = Weekly
then,
Wave = Daily
What I have understood is this:
- Tide = Long Term = Trend Identification
- Wave = Medium Term = Trade Identification
- Ripple = Short Term = Risk Management
Following are the 4 timeframes to study:
- Weekly
- Daily
- 75 Minute
- 15 Minute
Because,
- Weekly / 5 = Daily
- Daily / 5 = 75 Minutes
- 75 Minute / 5 = 15 Minutes
The types of trades corresponding to timeframes are as follows:
- Weekly = Positional
- Daily = Swing
- 75 Minute = Momentum
- 15 Minute = Intraday
I am only talking about the long side here.
No shorting.
I am also only referring to the cash segment.
No margins.
No leverage.
Pure delivery based, old school trading.
A trader who is fond of the "long-cash-segment-only-delivery-based" trading, must take the time to:
study all the above four timeframes in detail.
I would recommend the following books to understand each timeframe:
Weekly: How to Make Money in Stocks by William O Neil
Daily: Trade Like a Stock Market Wizard by Mark Minervini
15 Minute: How to Make Money in Intraday Trading by Ashwani Gujral
I have not found a book that discusses the 75 Minute timeframe.
However,
If you understand the Weekly, the Daily and the 15 Minute Timeframe, similar principles can be applied to,
understand the 75 minute timeframe.
Why not go below 15 Minute timframe ?
Well, too much noise on the chart.
15 Minute / 5 = 3 Minute Chart
Your could lose your mind, if you start trading the 3 minute chart.
It would create unnecessary stress and anxiety.
Don't go below the 15 minute timeframe.
For some of you, even the 75 minute is not suitable.
Because,
it forces you to look at the chart atleast,
5 times a day.
Because,
There are 5, 75-minute candles in a day.
Just stick to the daily and weekly.
Learn swing and positional first.
Once you have properly understood swing and positional, only then move to the lower timeframes,
that too, just for some fun and adventure,
with small position sizing and,
tight risk management.
Regards,
Rohit Musale, CFA
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