Choosing a timeframe

I've been playing with 1 minute charts for some time now and having fun with the the immediacy of the activity. With the Esignals charting software and 150 day historical intraday archives it makes doing backtesting great...the other big factor is the automatic plotting of pivot points and other formulae and studies. Almost as much fun as trading.

One issue that I keep running up against is what timeframe to use for medium term trading?

I plot the monthly pivot points and use them on my minute charts.

I like the play between the 30, 50 and 200 Simple Moving Averages in conjunction with the pivot points so I figured I would leave them on for longer trades.

I tried daily charts, 60 minute charts, 30 minute charts... today just as a play around I tried the 5 and 10 minute charts...they seem to have the correlation with those averages that looks nice and clean.

Now the idea will not be to use the 5 minute candles to day trade as the plan would be to hold these for the duration of a longer term trend or move so the 5 or 10 (5 seems best) gives enough graduation to allow playing with limit orders during the day for entry and exits and still be able to see days at a time for the overall larger picture.

Interestingly the 5 minute chart for 10 trading days looks so similar to a 1 minute chart over 1 day, except for the EOD gaps, as the monthly pivot points are there and seem to act as support and resistance in a similar manner. I can squeeze one month per page and that looks even more like a day.

I have read a lot about trading different timeframes and being aware of the longer frames as they relate to short term trading but it never really hits home until it is seen in a chart of my own making. Now I can easily see the tendency toward range trading as since the 6th of this month the price of HGD has stayed strictly between the monthly pivot point and 1/2 R1 until breaking it a bit on the upside this afternoon...basically from $7.95 to $8.70ish. That is a 75 cent spread for the last week and a half, most days were not nearly that wide. That helps explain my smaller profits, and more frequent small losses as my trading size is not large enough to take advantage of such small moves yet.

Not that I need an excuse. If I were trading for a living that is exactly what that would be, an excuse, as I would have to be able to handle all markets. To be honest, I should be just changing sectors and trading something else...

To be REALLY honest, I should not be playing with ETFs, I should be playing real stocks. In that case I could just play long and short positions of whatever stock I wished to give me the volatility that I needed for the larger moves. The restriction is, of course, the registered accounts not allowing short selling. That is the whole reason I ended up trading ETFs to get the advantage of buying bull and bear funds.

So I will stick to the ETFs for the time being and considering adding some longer term trades in my TFSA, perhaps some banks when I feel that the time is right.

Jeff.