| Posted in THE GATEWAY TO SHORT-TERM TRADING | Posted on
Pattern Cycles oscillate equally through all time frames. Trade setups remain valid in every chart
view, whether they print on 1-minute or monthly bars. Each chart length attracts a specialized group
of participants that interacts with all other groups through the universal mechanics of greed and
fear. This dynamic 3D process results in trend convergence-divergence through different time
lengths. Swing traders improve performance when they adjust their chart view to match the chosen
holding period. As Table 1–2 illustrates, modern swing tactics encompass both the world of the day
trader and the position trader.
Successful trade execution aligns positions through a multidimensional time view. First choose a
primary screen that reflects the holding period and matching strategy. Then study the chart one
magnitude above that period to identify support-resistance and other landscape features that impact
reward:risk. Finally, shift down to the chart one magnitude below the primary screen and identify
low-risk entry points. Alexander Elder defined many elements of this strategy in his Triple Screen
system in Trading for a Living. The time has come to expand his classic concepts to accommodate
the faster fingers of the modern high-speed markets.
Evaluate a trade setup through all time frames that may affect the position. The view just above and
below the intended holding period may not capture important trendlines, gaps, or patterns. Study
that market’s multiyear history before execution as time permits to identify large-scale swing
pivots. If the trade target passes through major highs or lows that are several years old, give those
levels adequate attention. Other players will see the same chart features and may use them for entry
or exit. But keep in mind that the importance of old price extremes decays over time. Consider the
current emotional intensity of the crowd before dismissing trades based on old obstacles.
Time frame analysis above and below the current setup chart will identify opportunity and risk in
most cases. For example, when a promising setup appears on a 5-minute chart, the swing trader
checks the 60-minute chart for support-resistance but uses the 1-minute chart to time execution to
the short-term flow of the market. This multidimensional approach works through all time levels.
Even mutual fund holders can benefit when they locate a potential investment on a weekly chart but
use the daily and monthly to time entry to the highest probability for success.
Market participants routinely fail at time management. Many never identify their intended holding
period before they enter a trade. Others miss major support-
TABLE 1.2
Trading Style and Related Price Chart
Participant Price Chart
Scalpers 1-minute
Day traders 5-minute
Position traders 60-minute
Investors Daily
Institutions Weekly
resistance on the daily chart when they execute on the 60-minute bars. Some sit on nonperforming
positions for weeks and tie up important capital while excellent opportunities pass by. In all cases,
time works as efficiently as price to end promising careers.
Time of day, week, and month all display unique properties that enhance or damage the odds for
profit. Market insiders use the volatility of first-hour executions to fade clean trends and empty
pockets. Options expiration week can kill strong markets or force flat markets to explode. Thin
holiday sessions offer dramatic rallies or selloffs in the most unexpected issues. And many Fridays
begin with government statistics that ignite sharp price movement.
Every profit opportunity arrives with a time shadow hanging over it. Learn to focus attention on
important feedback at the exact time that the information will likely impact that market. It may flag
an execution window that closes in minutes or offer an exit that should be taken without question
when it arrives. Recognize the impact of time on reward:risk before position entry and update
conclusions as each new price bar prints.
Swing traders must manage time as efficiently as price. Calculate the expected holding period for
each new position based on the distance to the next high-risk zone. Use both price and time triggers
for stop loss management. Time should activate exits on nonperforming trades even when price
stops have not been hit. Execute only when time bias improves the odds for profit, and stand aside
frequently.
view, whether they print on 1-minute or monthly bars. Each chart length attracts a specialized group
of participants that interacts with all other groups through the universal mechanics of greed and
fear. This dynamic 3D process results in trend convergence-divergence through different time
lengths. Swing traders improve performance when they adjust their chart view to match the chosen
holding period. As Table 1–2 illustrates, modern swing tactics encompass both the world of the day
trader and the position trader.
Successful trade execution aligns positions through a multidimensional time view. First choose a
primary screen that reflects the holding period and matching strategy. Then study the chart one
magnitude above that period to identify support-resistance and other landscape features that impact
reward:risk. Finally, shift down to the chart one magnitude below the primary screen and identify
low-risk entry points. Alexander Elder defined many elements of this strategy in his Triple Screen
system in Trading for a Living. The time has come to expand his classic concepts to accommodate
the faster fingers of the modern high-speed markets.
Evaluate a trade setup through all time frames that may affect the position. The view just above and
below the intended holding period may not capture important trendlines, gaps, or patterns. Study
that market’s multiyear history before execution as time permits to identify large-scale swing
pivots. If the trade target passes through major highs or lows that are several years old, give those
levels adequate attention. Other players will see the same chart features and may use them for entry
or exit. But keep in mind that the importance of old price extremes decays over time. Consider the
current emotional intensity of the crowd before dismissing trades based on old obstacles.
Time frame analysis above and below the current setup chart will identify opportunity and risk in
most cases. For example, when a promising setup appears on a 5-minute chart, the swing trader
checks the 60-minute chart for support-resistance but uses the 1-minute chart to time execution to
the short-term flow of the market. This multidimensional approach works through all time levels.
Even mutual fund holders can benefit when they locate a potential investment on a weekly chart but
use the daily and monthly to time entry to the highest probability for success.
Market participants routinely fail at time management. Many never identify their intended holding
period before they enter a trade. Others miss major support-
TABLE 1.2
Trading Style and Related Price Chart
Participant Price Chart
Scalpers 1-minute
Day traders 5-minute
Position traders 60-minute
Investors Daily
Institutions Weekly
resistance on the daily chart when they execute on the 60-minute bars. Some sit on nonperforming
positions for weeks and tie up important capital while excellent opportunities pass by. In all cases,
time works as efficiently as price to end promising careers.
Time of day, week, and month all display unique properties that enhance or damage the odds for
profit. Market insiders use the volatility of first-hour executions to fade clean trends and empty
pockets. Options expiration week can kill strong markets or force flat markets to explode. Thin
holiday sessions offer dramatic rallies or selloffs in the most unexpected issues. And many Fridays
begin with government statistics that ignite sharp price movement.
Every profit opportunity arrives with a time shadow hanging over it. Learn to focus attention on
important feedback at the exact time that the information will likely impact that market. It may flag
an execution window that closes in minutes or offer an exit that should be taken without question
when it arrives. Recognize the impact of time on reward:risk before position entry and update
conclusions as each new price bar prints.
Swing traders must manage time as efficiently as price. Calculate the expected holding period for
each new position based on the distance to the next high-risk zone. Use both price and time triggers
for stop loss management. Time should activate exits on nonperforming trades even when price
stops have not been hit. Execute only when time bias improves the odds for profit, and stand aside
frequently.
