Post 10 EWU Observations from a New Student

Hey Jody,

I’ve been doing a lot of simulated trading using replay mode on multiple time frames. The big issue continues to be managing the different time frames.

I’ll take a period of time and try to trade all of the setups, do a mediocre job and then go back and try to re-trade the same period a second and third time. Then I’ll go back and review the time frame and see what would have been the most appropriate way to approach each setup.

Now, these ideas may change as I do more simulations but it is beginning to dawn on me how to use the different time frames. I’ve been testing with 1-hour, 15-min and 5-min, which I really like because the 5-min gives me exceptionally low risk trades which quickly move to being managed on the 15-min if the trade works out, and ultimately to the 1-hour if I get lucky.

As a rule of thumb, it seems I want to always gravitate to the larger time frame. Say, I see the PW appearing to setup on the 1-hour chart. When I get a candle coming back to the Wave, I can go down to the 15-min and 5-min to see if there is also divergence on the lower time frames. So, I first use the lower time frames for confirmation. Then, if I feel like this is a trade-able PW on the 1-hour, I can go down the 5-minute chart to trigger an entry. As the 5-minute price moves favorably in my direction, I want to gravitate up to the 15-minute chart quickly. I don’t want to stay down on the 5-minute any longer than I have to; otherwise, it has a tendency to mesmerize me into making some foolish decisions.

Managing the trade on a larger time frame tends to give me much bigger gains. If I can get up to the 1-hour to manage my trade, it seems that I can hold on for some really significant moves.

I also notice that if I get into a bit of a bind, not knowing where exactly to get out, I can go back down again to the lowest time frame to give me a good exit. Say the 1-hour is at the Wave and the 15-minute is at the Tunnel. I know I’m probably at resistance and I need to get out, but where in the Tunnel and where in the Wave do I exit? I see that I can then go down to the 5-minute and it will be in some kind of BO move at this point. I can go down the 5-minute to time my exit using the BO exit rules. But I need to go back up to the 1-hour as soon as I get out of the trade.

It reminds me of juggling balls and clubs. After hours of practice, you begin to be aware of each club, individually as it moves through the air. When you first start, it is just hard to keep them in the air! But after many hours of practice, you’re aware of all three simultaneously and how your hands need to cooperate to handle a gust of wind. I have to believe that trading multiple time frames is just like that. At first it seems hard to just keep track of what is going on, but with practice, it becomes almost second nature.

I suspect trading using multiple time frames is going to take many hours of practice. But that’s as it should be.

-dave

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