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Hey this is Sasha Evdakov and thanks for joining me here at Tradersfly.com, for another session of Let’s Talk Stocks. Now here we are on episode Number 70 of the Let's Talk stock session and we are doing something a little bit different.
I like to use the glass board to teach the lesson, to explain to you about the different trading time frames, about the daily, about the weekly, about the monthly and when to look at what chart, why would you want to look at the daily, why would you want to look at the 10 minute, why would you want to look at the weekly or monthly.
Then maybe that’ll give you a little bit of a different perspective. If you’re joining us on YouTube enjoy this lesson we're going to try to do it uncut and see how things go and then if you're listening to us on podcast and you want to see the lesson, then just head on over to Tradersfly.com where you can watch the lesson.
I found that a lot of people struggle with evaluating the different time frames and even some of the students that have my blue technical analysis course, sometimes the look at the daily but they won't look at the weekly or they won't look at the monthly or they’ll look at the weekly and monthly but they don't look at the daily.
There are a lot of different time frames that happen on the charts as you start looking at charts as you start looking at your charting platform, there's a lot of different time frames that are available. You can look at a ten minute, five-minute, thirty-minute, or one hour.
There’s many opportunities available for you to analyze and evaluate charts and the question comes down to is which time frame is the best one to look at or which one should you personally look at, because my time frame or my time horizon might be different from your time frame or your time horizon.
Let’s discuss different the Time Horizons
When you're getting into the trade you need to evaluate all those different time horizons to see which time horizons is going to work for you. Let's start out with breaking these different time frames down. Let's look at the daily here, so we have a time frame of the day and within that day you may have something like a 10 minute, you may have had the thirty-minute, you may have the hourly.
There are a lot of different time frames just within the day the chart and these typically are called the intraday timeframes, so they're interdict because they’re minutes and they’re within the day, but our primary one here is still the daily.
The next one that we’ll take a look at or the main one is, I like to look at is the weekly. So the weekly also you can start breaking things down into it. So you can have multiple weeks and you know you can even go into let's say a two-day, a four day, maybe even five or six day. There are different time frames that you can look at there and then finally the monthly.
Within the monthly, you have also more time frames within here, that as you get into the monthly there's even you can get into the quarters that you look at or even the yearly . This might even start to break things down over here as you get into the yearly.
What do these Time Frames tell you?
You start looking at these different time frames and you start seeing, what these time frames tell me about the stock and each one of them will tell you something different. If I look at the daily and I’m looking at the chart and I’m looking at the daily this time frame relative to let's say the big picture.
Let's just say that this is the big picture time frame, this will represent time and will continue moving it all the way over here and so this will represent time and this over here also time continues back over here.
As we break things down right here on this long sheet, you could be looking at a smaller segment, if we're looking at just the daily you might be looking at a segment that's about this big. So it'll be a small segment, as you start looking at the weekly, that time segment could be longer, that time segment might be this big.
Now you start looking at that length of time and as you continue and you're looking at these different time frames, you get into the monthly which looks something like this and now we covered this range of time and the yearly may cover even much more length of time so you can see how these now start covering more and more and more time.
This will be the yearly, this will be the monthly, then we have right here the weekly and this one right here is the daily. These are different time frames that we have.
Now as we start looking at this, I start looking and evaluating, as I'm looking at the chart and let's just say I'm looking and I'm ready to pick out my stock, if I'm ready to pick up the stock that I’m looking to trade I start looking at typically the daily and weekly.
These are the time frames that I’m looking at when I’m looking to pick a stock and why do I do that, well it's a good way to scan the range, it's a good way to find patterns. Sometimes I'll even look at two day or a four day.
You have to find something that works for you because that's a typical trading range for me and what I look for is this range, I’m looking to make sure that that stock is going to move fairly soon. Looking for a breakout looking for stability whatever it is if your trading options and you're looking for more income trades then you're looking for is that stock stable, is it weak, is it acting strong.
I'm looking at this daily and weekly chart time frames so that's where I typically will start out with and if things makes sense for me on the weekly and that chart lines up and I see a pattern, let’s just say if I look over here and let's say this stock is moving like this and I see a pattern right here this is my support line.
That's my support line and I see that pattern start evolving and this stock maybe we'll start to break right here and I'm watching it, I'm watching for the potential for it to break at that support line so if I’m watching it to break at the support line on the weekly here and I'm watching how things line up.
Then what I want to do is I want to see, if does the monthly also makes sense, does the yearly also makes sense, does the daily makes sense so I’m looking to see all those things in alignment. If I have the weekly in alignment but the monthly and the yearly shows something completely different.
If they don't line up then I only have right here a one out of four that lineup, the probabilities and the percentages of things lining up the dots, as I line these dots up they are not in alignment, they're not in alignment like this instead one-dot is over here, the other dot’s over here, the other dot’s over here and one dot’s over here.
You know, it's not in alignment, for me to get into the trade instead what I want is a clear direction. I want a clear direction to how that stock is moving, is it moving straight to the downside with all these things or is it kind of whipsawing me around on these patterns because if I'm getting whipsawed on these patterns, that means that I might get faked out on the daily, that means I might get faked out on the monthly or faked out on the yearly.
There are problems in these regions and areas but if I have all of them in alignment then I'm ready to go, I’m ready to get in stock and I'm ready to go in the trade.
Analyzing the Time Frames
Let's break these things down a little bit further so here what I’ll do is look at the daily then I will also look at a weekly will also take a look at the monthly and here is kind of our trading time frames that we have.
Now the next thing that you'll probably have, is you have your different stocks. So here you have stock one, then you have stock number two and let's just say stock number three. Here we have our three different stocks that were looking to trade or potentially trade.
Now I'm starting to evaluate, do I look at the daily weekly and monthly ok let's say I'm looking at the daily. Stock number one looks great on the daily, it looks horrible on the weekly and it looked bad on the monthly.
Do I want to take this trade? Probably not because it's not in my favor, the probabilities aren’t there.
Then I got to stock number two, I look at the stock and I say ok the daily’s lining up, the weekly is lining up but the monthly’s not lining up. So, do I want to take that trade? Probably not.
Then I look at stock number three and all three things line up, they're all in alignment. Do I want that trade? Yes that's the one to go with and it's a simple thing because when you're looking at all three time frames, when you're looking at the daily, the weekly, monthly and everything is in alignment that means everything is good to go, everything's ready to go.
If you only have one of these pieces, let’s say like stock number one ok, if we have stock number one right here and this one is actually moving and looking good on the daily, the problem with this one is that you really have day traders that hop in, the reason it's moving or it looks good is potentially for short-term trading.
These traders are short term and although you can trade it, so you can trade these stocks on the daily but you need to be fast ok so that's one of the disadvantages behind trading stock number one is you have to be fast because you have to hit it because the daily charts is in alignment.
The weekly and monthly charts are not on the alignment because the long term traders are not looking for that stock. If our stock for example, let's just say is moving like this and this is our daily chart but the overall weekly chart move something like this, let’s say to the downside.
Now you may catch it nice on the daily and you can still trade this but the problem is the long-term trend, if you're holding that stock for weeks or months it's looking down, if you're holding it just for the day it's heading to that upside.
Looking at it this way you see that the stock number one here is for a short-term.
Stock number two is more of a medium term, here you have weekly people that are also interested so now you have the daily and weekly that works in your favor but you don't have the monthly. What does that mean? That means the stability is not really there, the stability is not as there as much there as stock number three so there's less things in your favor.
For me, the way that I do this, is I look for all of these to be in alignment if one of these is missing then I know the probabilities aren’t there. So, what does this mean to me? What it means is if I'm trading stock number one for a day trade then you trade less shares you trade lighter.
If I’m looking for stock number two and things look like they're getting ready to set up then I may trade just slightly more and if all things are in alignment you're in, and you're in the trade if all things are lining up the daily, the weekly, monthly, if all things are in alignment you're in the trade.
However, if you only have just one of those if you only have just the daily, that doesn't mean you can't trade it, you can it but you might only be trading if let’s say this is our monthly chart, you might only be trading it for this little portion to the upside or the downside whether you’re trading short or long.
You might only be catching it for this small little move, so these little moves you can still trade it in the other direction but it's for a smaller time frame and you need to understand that the bigger picture, the majority of the money is pointed to the other direction.
I would personally rather trade where the monthly and weekly are being traded rather than just the daily and that just helps align more things in my favor rather than just playing within the day trade and that's what allows me to be a little more stable, it allows me to be a little bit more calm minded when trading because that's why I can do these videos because I'm not worried about little moves over here because the bigger move is happening on these weeklies or the monthlies.
For many people if they don't check the weekly or the monthly and you don't see your ABCD patterns, if you don't see those things if you don't check your Fibonacci levels in these other ranges then the rest of it you know in here, in this daily range you’re just playing around with short-term moves and gains and most of this, most of this day trading range is computer algorithmic trading a lot of it or people looking for a quick money or the quick dollars.
That’s okay, you can still do really well in here, there's a lot of traders that too fantastic day trading but it's harder, you have to be faster, you have to be quicker and you’ve got to remember that it’s shorter term so you're playing in these little short ranges and not in the longer term range.
You have to decide what kind of trader that you are what kind of trading that you want to do and you really need to be on top of your game in using your computer in being fast in order to hit these stocks at the right time, at the right place and then hit them, make your cash whether you're in it for five minutes ten minutes 25 minutes.
It could be even an hour, could be five hours and then you're out, you're out for the day because you don't know what going to happen next day because of that longer-term trends so if you're looking for spring training if you're looking for more stability, you're looking for something to line up, you're looking for higher probabilities.
You want the daily to line up, you want the weekly to line up and you want the monthly to line up and when all these things are in alignment when, everything is moving together it's like a train just moving it's moving in one direction unstoppable, then you got it then you got it everything's moving and the probabilities are in your favor and you just ride it down and just ride that stock down and let it ride.
You collect your profits, you take your hat off into strength, you take your money because that's what the business is about, it’s about taking your profit and taking your money off the table. Once you're in, once you're in trade and take half off as things move in your favor, take a third off, take a quarter off.
As things are moving in your favor, you have to take your money off and I didn’t really learned this still many years later down the road because a lot of times I wanted to go ahead and just raise my stop and I wanted to continue doing this, so as that stock continues let's say moving forward or if we did one of these I wanted to just continue raising my stop higher and higher and higher, that way that stock drops I’m out at this level.
However, what happened and what I realized quickly was that sometimes those stocks drop three or four times below my stops and then I'm out with a loss and if you're finding yourself you're getting out emotionally with a loss and you're getting out a lot of times negatively, that is because you're not taking your profits in the strength.
When things are calm you're doing nothing, you're hoping that stock continues to move to the upside instead when things are calm you need to be mindful and say hey I'm going to take you know fifty percent of this, I need to take it off or I need to take you know thirty percent of it off the table because I need to collect my money.
Then right here when these things tank took off half so if it comes back right to your entry point, you still took 50% of your money which means you are now at breakeven so that's how money is made, that's how you look at the daily , weekly and monthly because you want all these things to be in alignment.
If one of these things are not in the lining, trade less and go lighter. If you normally trade 500 shares and all of these things are not in alignment then you should trade two hundred years or 100 shares if you’re new or 50 shares if you normally trade let's say, you're normally trading a thousand shares or five thousand shares and only one or two things are in alignment or you're unsure, you see certain things you see certain things coming in but you're unsure, it might cost you $5 or $10 to do that trade or $15 but you just trade 200 shares or 400 shares.
That way you're not trading 5,000 or a thousand shares, so what if the cost you an extra $15 to do that trade but what happens if these five thousand shares go down three dollars, what kind of loss is that, that's a huge loss.
Look for all of these things to be in alignment for you to get in fully if one of those things are not in alignment, trade less shares and that allows you to be a little bit more clear minded, calm mind it because if you’re trading heavy on the daily on these whipsaw actions, it's an emotional rollercoaster you’re going to be up and down and up and down moving all around and then you won't trade calmly and you're going to have losses you going to be riding it in fear.
You're going to have those emotional struggles and then you can have a hard time sleeping and that'll affect you in other parts of your life. Look for all things in alignment and that will allow you to be more calm as you trade.
Thanks for sticking around here while I film this during my lunch break, I hope you enjoyed the lesson and really got something out of it and we tried something a little bit different here today but in either case I hope the message was clear that you really need to take profits and the strength and look at multiple time frames to make sure all those things are in alignment.
As for me I'm ready to go get some lunch so hopefully you didn't hear my stomach growling too much but in either case this will give me some time to render the video and get it uploaded to you.
Thanks again for sticking with me hope you enjoyed the video and if you did you want to see more videos like this and you're not on the newsletter list and go ahead click that button right up there or hit one of the links below this video and you can see some of the other products and courses that I have available.
Remember, do what you love, contribute to others, but most importantly live life abundantly. I’ll see you next time!