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Trading Price Action Reversals: Technical Analysis of Price Charts Bar by Bar for the Serious Trader by Al Brooks

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CHAPTER 13

Time Frames and Chart Types

For a scalper, it is easiest to use a 5 minute candle chart for the Emini. However, for intraday swing trading of the Emini or stocks, a simple 5 minute bar chart works well. This is because on a laptop or a single monitor, you can fit six bar charts on your screen, each with a different stock, and each chart will contain a full day's worth of bars. If you use candles, which are wider than bars, your charts will show only about a half day of price action. An important reason for mentioning this is to remind traders that this approach works well with simple bar charts, especially when you are trying to swing trade only the best entries. The advantage of candle charts on the Emini for scalpers is that it is easy to quickly see who owns the bars, especially the setup bar. Also, a lot of high and low 2 variants are not easy to see on bar charts.

Price action trading techniques work in all markets and all time frames, so traders have to make the obvious basic decision of which markets and time frames they should trade. The objective of most traders is to maximize profitability over the long run, and implicit in that is that each trader needs to find an approach that suits his or her personality.

If a 5 minute Emini chart offers a dozen good entries on average every day, and the 3 minute chart offers 20, and the 1 minute offers 30, and the risk (size of the protective stop) is eight ticks on the 5 minute, six ticks on the 3 minute, and four ticks ...

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