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Question from Student
First and foremost, thank you for sharing your valuable knowledge, its much appreciated.
For scalping/daytrading CL, EC, GC, RTY, what would be the suggested time-frame to set up the charts as per the Trading with More Special Set-Ups Webinar--Stochastic 5,3,3 and BB 18,2, but what time-frame do you suggest, 3min/9min?
The time frame and the setups are independent of each other—mutually exclusive. The setups will work in any time frame that has adequate volatility, momentum, and volume. I believe this is true of any setup, those mentioned or any others.
Unless you are using a fixed dollar risk amount, you choose a time frame based on the amount of dollar movement you can handle. Obviously, except in special circumstances (like a financial report,)the larger the time frame, the greater will be the movement of dollars.
For example, a violation of the high of an hourly bar is going to take a lot more momentum than the violation of a one-minute bar.
The distance from high to low of a one-minute bar is usually a lot less than the distance from high to low than an hourly bar—that distance is defined as volatility.
Typically, an hourly bar will contain both more trade volume and contract volume than a one-minute bar.
So you adjust the time frame you are using to the amount of dollar movement you require for your objective. If your objective is to scalp for $100 with a ten-lot every time you trade, you need to use a time frame that will easily and quickly give you a $100 move.
Ask yourself, "Is it easier to get a $100 move a one-minute chart, or is it easier to get that size move on a ten-minute chart?"
I covered all of this in my eBook, "Stopped Out," which shows you how to calculate exactly how determine your risk, your stop-loss, and how calculate your possible "stop-win"—if I can use that term to explain when and where to expect to get out of a winning trade. Both a "stop-win" and a stop-loss can be either fixed, or calculated, according to your trading style.
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