The Ideal Time Frame

The Ideal Time Frame

Choosing the ideal time frame gets down to the Model T Forex Trading System sheer objectives. The time frame will, at the end of the day, define it’s personality! šŸ˜‰

Let’s get over the easy parts…

It’s not an “investment system”, therefore Monthly, Weekly and even Daily are discarded.

So, it’s a “trading” system. We’ll not engage in “scalping” and un-trendy short term trading. So… no ticks, 5, 10, 15, 30 sec, and 1 minute time frames.

About the 1 minute time frame, though, it’s important to say that many day-traders are using it. There’s nothing wrong with trading the 1 min, aside from two problems:

  1. The spreads need to be very tight to handle both the shorter ATRs and the many consecutive trades;
  2. The 1 min is too far away from any fundamentals’ substance. It is, most of the time, just “noise”.

Finally, we’ll not get into “swing trading”. For me – and please don’t get me wrong, it’s JUST my opinion – swing trading leaves many things undefined, uncertain.

You can define a time frame, all right, like the 4-hour for instance. What you really can’t do, though, is to box within trading sessions (like the London trading session) the entries and the exits of your trading strategy.

So, let’s see your system gives you an entry signal at midnight, and you’re deeply into your 911 dreams! See how annoying a swing trading system can become? Not so, of course, if you have a robot trading for you! But this is another story…

So, here we are, left with the traditional choices of the “conservative”, “non-scalper” day-trader: 5, 10, 15 or 30 minutes time frames. Or anything in between, of course, if you wanna be unconventional or a little bit “British” (if compared to the shillings and pence system)! šŸ˜‰ If you’re British, don’t get offended – on the contrary… I’m praising you for your strong personality, and I’m a BIG fan of it!…

The Model T Forex Trading System was developed and optimized to handle any of those time frames.

My personal preference is the 15 minutes. Let’s see why:

  1. Under positive but not necessarily exceptional conditions, the 15 min may be able to carry a trade from start of the London session to finish, and its not unusual to produce profits that are close to the entire daily ATR. In the 5 minutes this is almost impossible, and in the 30 min you will frequently miss the ideal entry levels;
  2. Reassessing trading activities after “news” is normally ideal after 15 minutes, too late after 30 minutes, and too early after 5 minutes.

There are setbacks, though, like in everything we do in life.

In periods of high volatility like the present days, the 15 minutes time frame seems like an eternity! You start biting your nails for not trading the 1 min, or the ticks, for that matter.

But we have choices. I’d rather reduce the risk exposure and keep trading the 15 min, instead of switching to shorted time frames immediately. If the strategy doesn’t work, then we’ll thinks about what to do… We’re ready to reduce the time frame at any time.

Once we have the R3D3 Robot trading for us, though, all strategies about “the ideal time frame” will have to be revised.

Swing trading will instantly be viable (signals will wake up the robot, not us šŸ˜‰ ), and even scalping might become an alternative, for the proximity of our servers to the exchanges, allowing executions in micro-seconds.

We’ll see. In the meantime…

Thanks for watching…

 

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