Confirm with a bigger chart

Are you watching a 1 minute chart as you biggest time frame?

Really this question is, are you watching a 1, 2 or 3 minute chart as your bigger time frame? The reason we want to take a minute to talk about these questions is because we see and talk to many traders and we are shocked at the amount of traders that are relying on very small timeframes as their bigger direction chart.

One minute chart, 300 Tick, 3 Range, it is all the same.

In this article we want to open your eyes to something that you might be missing or something that might be causing you to lose money and confidence. The smaller charts can tell you valuable things but it should not be your overall outlook chart. A 1, 2, or 3 minute time frame is actually too small to gain the bigger direction and worse yet we see so many traders’ charts and they are only looking at today’s action on a small chart. This is making the already small view even smaller!

We get it, the smaller the time frame the smaller the risk but in looking at only small time frames your profit potential is also limited and small charts will give you more false signals. It is you knowing when to skip a trade because it has low odds of success. So how can you get high odds only looking at a small time frame? YOU CAN’T!

So what you might be doing is actually adding in more confusion to your trading. The goal is to take away the confusion not add more to the situation right? Right!

People think we are crazy when we say we look at the 60 minute chart for day-trading. They say “you aren’t trading the 60 minute so why look at it”? The truth is we are trading all the charts but we are just using the 3 minute as our entry method. There is only one price for the ES at each moment in time so we are trading all charts. Why are looking at the 60, 10 and 3 minute charts? Each chart gives us the bigger, medium and short term view. Even though the charts may look different they are all the same thing.

Learning how to read patterns is going to be very crucial to your trading success. Do not rely on software to recognize patterns for you we have never found any that are as good as you learning them and drawing them in yourself, why? Because all the pattern software changes the pattern in real time and this will add confusion to your trading.

Knowing that patterns are very important we then break it down on each time frame because the market moves in waves and waves within waves. So without knowing where we are at in the bigger pattern it is very hard to have confidence you are trading in the right direction. Taking it one step further you must also know when the move is most likely coming to an end so you are not going long right at the upper targets or the bigger sell zone.

Would you drive down the freeway at 100 mph starting at a dot on your windshield? No, because this would be very dangerous. Even though you would not do this driving down the freeway you might be doing it with your trading. It is called tunnel vision and you can get hypnotized with every little move and the market will suck you in right in the middle of a bigger correction.

Where is the money made? The money is made when the market expands called an impulse. Within that impulse there will be minor retraces that are 100% counter trend to the bigger trend. But if you are just looking at the small time frame guess what? Those minor corrections look like they are tradable but in reality they are not because they are minor and they are corrections.

If you do not know how to spot the expansions chances are you are trading the correction and since corrections are choppy and hard to trade you are actually trading the hardest spot on the chart. It is the feeling of watching the market go up 10 points and you were not long so now we are at the top and you are stuck. You didn’t catch it long so the only thing to do is try to short against the expansion. We know how it is, we have been there done that.

The difference is not trying to find something to make it easier to trade the correction, but learning how to catch the expansion!

Conclusion:

Try looking at higher time frames to confirm the direction and start learning the discipline of only trading in that direction. You will be rewarded for it in the long run with profits now and confidence for the rest of your trading career.