Thread: daytrading
View Single Post
Old 23-03-2006, 01:25   #2
pipmarshal
level 1
 
Join Date: Mar 2006
Posts: 6
Downloads: 0
Uploads: 0
Rep Power: 0pipmarshal is on a distinguished road
Re: daytrading

Higher the timeframe lesser the entries and lesser false signals.
Lower the timeframe more entries and more false signals.

This is the fact with any strategy, when you go to a lower timeframe you have to compromise a bit on reliability of the signal. So while testing a strategy you start from a higher timeframe and go lower. Once you reach a stage where going lower is not adding to the priftability you stop.

For example, the below table gives the total profit for a month timeframewise. The profits and number of trades are arbitrary and hypothetical.

Daily chart - 50 pips from 2 trades
4 hours - 100 pips from 5 trades
1 hour - 150 pips from 10 trades
30 mins - 200 pips from 15 trades
15 mins - 175 pips from 25 trades

You would agree that 30 mins is the ideal timeframe because the winners give 200 pips more than losers. When you go lower to 15 mins timeframe, the false signal increases and the profit decreases. So you should find out the ideal timeframe for your strategy by back testing and forward testing. I do not believe there is any specific tool which might help you find out the ideal timeframe.

BTW, would you mind outlining your strategy for more info.

Have a nice 100 pips day.

PM
pipmarshal is offline   Reply With Quote