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#284 - What's The Best Timeframe For Stock Charting?: Hey everyone. This is Kirk here again at Option Alpha and welcome back to the daily call. Today, we’re going to answer the question, “What’s the best timeframe for stock trading?” This is actually a user submitted question. Somebody submitted...

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Hey everyone. This is Kirk here again at Option Alpha and welcome back to the daily call. Today, we’re going to answer the question, “What’s the best timeframe for stock trading?” This is actually a user submitted question. Somebody submitted this question into us, again, which is a great way if you have questions about options trading, stock trading, the market, etcetera. Get those questions into us, so we can queue them up on the daily call. But somebody said, “Can you give us an idea of what the timeframes are for indicators in particular that are best and useful? On a month-to-month as you show in many of your examples or day-to-day or do they work just as well on three or one hour or five minute charts, etcetera?” Really, the idea here is when you're looking at charting and when you're looking at in particular, technical analysis indicators, what do you use? Do we use a one hour chart, a one day, a one month, a one year? I mean, there are many different chart formats you can use. I think for most of the testing that we've done, obviously, we've done it on a daily basis, so daily charts. Not intraday charts. We’re not doing one hour, one minute or tick charts, etcetera. We’re doing one day charts or one day closes and wicks. For a lot of other people, if they use charting patterns, I know there are some big-time traders that like to use charting patterns using weekly charts or monthly charts. I think the thing that I would say on many of these charting techniques and indicators is that the indicators are only as good as the timeframe that they’re used on. In many cases, if you get a sell signal, but it's on say a daily chart, well, that's going to be reflective in potentially a move of a couple of days. If you get a buy signal and it's on a monthly chart, well, it could be a very big move that takes many, many months to actually play out. You have to be understanding in just looking at what chart you're looking at and how long that signal might last. On a say intraday chart, that's one minute or two minutes for every tick. If you get a buy signal, that only may last for maybe four or five minutes. I mean, it’s going to be that quick. Do you have enough time to appropriately react to that? Can you get into positions that are liquid enough and then get out of it? We've really never found with technical analysis that intraday stuff really works well for us, nor do we like to trade options on an intraday basis. We’re not selling option contracts and then buying them back or vice versa every single day. We’re trying to be position traders. We like to trade using daily charts. A lot of our back-testing and research has been done using daily data which is a lot easier to get. It can get longer timeframes. And so, that’s what we like to use. Hopefully it helps out. As always, if you guys have any questions, let me know. Until next time, happy trading.

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