Timeframe shift.

I was a little unimpressed with the daily trading setup I was using when I started looking at longer term trades earlier and I could not put my finger on the reason, until today. I am not trading today even though I am at home for the afternoon. Technical difficulties and everything is so outside of my charts now that I would be doing as much guessing as anything else...best to leave it alone.

So, in the interest of figuring out what is the best approach to get going on I decided to play with the timeframes.

In my daytrading the pivot points are based on the previous day's high low and close, this is the pivot point period. Seeing as there are 390 minutes in a day that makes the base pivot point period (1 day) almost 400 times larger than my trading period (1 minute). I used an intraday chart and plotted 5 minute bars instead of 1 minute bars, it becomes almost untradeable based on the daily pivot points and the ratio is 1:78.

I figured that I should use some similarly large ratio to use for the longer term trades. One month pivot point period used to trade an 30 minute chart is 1:260. Now my stockcharts does not allow 30 minute charts past a certain timeframe so I cannot create a 30 minute for December and still have the averages correct, so I cheated and used the hour chart (longer hourly history available) and just divided the averages by 2. So a 200sma in the 30 minute timeframe is the same as a 100sma in an hourly timeframe.

Here is the same chart for BVF that I started out with before, only in the 1 hour period with the equivalent of moving averages for the 30 minute timeframe.

Red arrows are short sales, green arrows are long. I circled the trades that use the sma for entry or exit. The assumption is that every trade is taken either as the price moves away from the respective line or is crossing and past, the trade is taken in the direction of the move. It's a little more complicated than that as some of this is based upon just doing the trades and knowing how it moves and when to jump in and out. No trades are held for a loss, breakeven before commissions are deducted but the trade is exited before it can go in to the red.

16 trades, $4.05 per share profit. In my case I would be trading 400 shares so the net would be $1428. Now this is not in a tax sheltered account due to the shorts so I would lose marginal income tax off of that, say net after taxes might be around $800. Apply my fudge factor here and the total comes down to $560.

The 400 shares is base upon a $5K working capital. I would plan to have two other trades of a similar value at the same time as I have no qualms about using margin. That should be able to triple my potential returns. Yes, it could triple possible losses if I let a trade go for a loss. Assume that all trades in December were about as profitable the total take could be in the $1500 range.

This obviously needs to be checked out more thoroughly before actually being put to the test, but it is a start.

Next I will play with another timeframe and averages, get this going more long term.

Jeff.