Why utilize the 1 hr and 30 min candles when scalping?

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Nimo_jr_btf
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Why utilize the 1 hr and 30 min candles when scalping?

Postby Nimo_jr_btf » Tue Feb 15, 2011 7:07 am

Totally newbie question here, but as someone that is learning to scalp stocks, I am not seeing the value of the 30 min and 1 hr candles when scalping.

IMO, the time frame that a scalper is exposed to the market is so short, the market direction/trend shouldn't matter, right?

I know TRO have useful tools such as the TRO DIGITAL COMPASS, so there must be a reason to be aware of the direction of the market in different time frames.

Can someone shine some light?

Thank you.

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Relativity
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Postby Relativity » Tue Feb 15, 2011 1:32 pm

I do not scalp stocks so I do not know. But in forex I do see value in M30 and H1 when scalping, since its less stressful to scalp when one knows what the major timeframes are really doing. It would be nice if you can share details of your method then we maybe able to understand further.

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Postby cwn6161 » Tue Feb 15, 2011 3:37 pm

Each candle, regardless of timeframe, has an average range that it will move. If you know that average, and can determine a direction to trade, you can assume a certain amount of profit that can occur in that time.

If the 1H had an average of 2 dollars, and after 45 mins the current bar has a range of 1.5 dollars, do you think you'd be able to make 2 dollars on the 15 min left in the candle if you were to enter immediately?

Use higher timeframe ranges to look for profit opportunities within smaller timeframes.

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Postby Nimo_jr_btf » Tue Feb 15, 2011 4:41 pm

cwn6161,

Than you, that was very informative. It never occurred to me in that sense (to consider the range of longer TFs). I'll keep an eye on the hourly candle to get a better grasp of what you're saying.

I'll take a guess at your question. I'd probably wouldn't enter immediate expecting to gain $2 in the last 15 min.

I'd look for <$.50 gain if there's a clear direction of the price extending beyond the current $1.50 range of the current hrly candle.

This is because I am looking for a move from/to the extremes of the hourly range, and if the current hourly range has covered both a direction and majority of the expected range (looking at previous hrly candle), I wouldn't be comfortable to enter a trade.

I hope I am on the right track. :?

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Postby cwn6161 » Tue Feb 15, 2011 4:48 pm

Nimo_jr_btf wrote:cwn6161,

Than you, that was very informative. It never occurred to me in that sense (to consider the range of longer TFs). I'll keep an eye on the hourly candle to get a better grasp of what you're saying.

I'll take a guess at your question. I'd probably wouldn't enter immediate expecting to gain $2 in the last 15 min.

I'd look for <$.50 gain if there's a clear direction of the price extending beyond the current $1.50 range of the current hrly candle.

This is because I am looking for a move from/to the extremes of the hourly range, and if the current hourly range has covered both a direction and majority of the expected range (looking at previous hrly candle), I wouldn't be comfortable to enter a trade.

I hope I am on the right track. :?


Yup, that's right. We never need the whole pie (or candle) to win, just a good chance at getting a few slices (from a scalping perspective).

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Postby Nimo_jr_btf » Tue Feb 15, 2011 4:50 pm

Relativity,

Thank you for your reply. I am currently learning TRO's method around the BZ, and I also play around with s/r.

I try to fade the gap using the buy zone in the morning with aapl, scalp what I can or let it ride if there's momentum. I also trade off the s/r with rimm, and sometimes with aapl.

I don't have a firm grasp of anything yet, lol, but I think I am making progress.

May I ask what you mean by looking at what the majority of the time frames are doing?

Thank you.

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Postby Relativity » Tue Feb 15, 2011 10:13 pm

Nimo_jr_btf wrote:Relativity,

Thank you for your reply. I am currently learning TRO's method around the BZ, and I also play around with s/r.

I try to fade the gap using the buy zone in the morning with aapl, scalp what I can or let it ride if there's momentum. I also trade off the s/r with rimm, and sometimes with aapl.

I don't have a firm grasp of anything yet, lol, but I think I am making progress.

May I ask what you mean by looking at what the majority of the time frames are doing?

Thank you.


Looking at major timeframes to me, at least, means knowing what the big moves of the market are going to be like. Knowing that, its safer. Then commit to trading only 1 direction using only 1 strategy; zoom down to the smaller timeframes and trade normally from there.

e.g. always follow the W1 candle color.

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Postby Nimo_jr_btf » Tue Feb 15, 2011 10:37 pm

[/quote]commit to trading only 1 direction using only 1 strategy; zoom down to the smaller timeframes and trade normally from there.

e.g. always follow the W1 candle color.[/quote]

I see, it's almost like the larger candles are the guiding lights for trading on a smaller frame, both in direction and range, relativ(ity)ely speaking. Thanks Relativity.

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