To explain this concept I would like to use analogy of weather forecasting.
Consider you are living in Mumbai and you are suppose to make following are 3 weather forecast:
1. Will it rain on 2nd August at 1:15PM ?
2. Will it rain in first week of August ?
3. Will it rain in month of August ?
Equvivelant in stock time frame is
1. Will price move up by 1% in next 2hrs? (use 5min or 15min chart)
2. Will price move up by 5% in next 3 weeks? (use 1hr or daily chart)
3. Will price move up by 15% in next 6 months? (use weekly Chart)
Even if you are using simple logic and charting tool accuracy of Answer to Q3 will be much higher than Q1.
When accuracy increases it is less taxing on our mind and we can get reasonable return without much stress. To trade weekly chart we need patience and a reasonable SL. This will also allow us to build position over few weeks as we get clarity of trend.
Let us understand with few samples.
This is 5min chart. We can see lot of whipsaw.
And below is weekly chart. We can see reasonable trends over few weeks.
Consider you are living in Mumbai and you are suppose to make following are 3 weather forecast:
1. Will it rain on 2nd August at 1:15PM ?
2. Will it rain in first week of August ?
3. Will it rain in month of August ?
Equvivelant in stock time frame is
1. Will price move up by 1% in next 2hrs? (use 5min or 15min chart)
2. Will price move up by 5% in next 3 weeks? (use 1hr or daily chart)
3. Will price move up by 15% in next 6 months? (use weekly Chart)
Even if you are using simple logic and charting tool accuracy of Answer to Q3 will be much higher than Q1.
When accuracy increases it is less taxing on our mind and we can get reasonable return without much stress. To trade weekly chart we need patience and a reasonable SL. This will also allow us to build position over few weeks as we get clarity of trend.
Let us understand with few samples.
This is 5min chart. We can see lot of whipsaw.
And below is weekly chart. We can see reasonable trends over few weeks.
