The Right Time Frame For Your Entries | Podcast Episode #145

0:00
Hey, everybody. This is Ryan Mallory with Swing Trading the Stock Market. And today’s episode is going to be about time frames and entries and how those two mesh together to find you that right entry price on the right time frame. So, Going to get into that.

0:16
It’s from a guy named, and we’re gonna use the name Zeke. That’s a good Florida redneck name. Zeke is his name for this email. And if you’re wondering what bourbon I’m drinking today, this is Woodford Reserve Double O. It’s a barrel finish select. It’s 45.2% alcohol. 90.4 proof.

0:35
Again, it’s double oak. It’s bourbon that’s finished in new heavily toasted, lightly charred barrels, and it’s finished in a second oak barrel. So it’s pretty cool. The bottle’s awesome. It’s got a nice caramel taste to it. On a scale of 1 to 10, I, I give it like an 8.4. In terms of bourbons that I’ve done on this podcast, I’d say it’s a top 5, really good, really good price points, like $50 something dollars, but really solid.

0:57
I mean, I like it a lot. Once I finish this one, I’m gonna go back and get myself another one. It’s that good. Now let’s see what Zeke has to say about charts and time frames. He says, love your content in the podcast. Thank you for taking the time to offer up solid advice and teaching. And I do that. I’ll, I’ll be more than happy to answer your questions.

1:14
Send them to me at ryan@shareplanner.com, and I’ll make an episode out of it if it’s a good solid question. So he says, I am sure you get tons of questions, but a big one that I either haven’t picked up on or haven’t retained is the actual setups of chart timing. I see a lot of instructions showing. Bullish pattern on one time frame, say like a 4 hour chart, then dive it into a 5 minute chart.

1:35
It looks the exact opposite. For swing trades specifically, do you have some advice for time spans and scanning for charts and how do you drill down to find your entry and exit point? I hope I am explaining my question in enough detail for you. You are. You did a good job. Again, thank you for your honesty and guidance this far.

1:52
You have a long term follower out of me. Well, thank you. And first off, it’s important to know like the main timeframe. So, I would say for swing trading, your main timeframe is going to be the daily. That’s typically what most people trade off of. It’s what I trade off of. I trade off of the daily. That’s my main one.

2:08
When I’m looking at whether or not a stock is bullish, bearish, neutral, something else in between, I’m looking at the daily chart. Now, you can also go even further out and look at like the weekly chart, and then you got the monthly chart. Beyond that, there’s not much. I, I think monthly chart is very, very difficult to trade off of, but that’s, that’s got to be something that you’re really, really trading long term, like 20 year plays off of because the level of patience, and I don’t have it, that’s required a trade-off of a monthly chart.

2:34
I mean, you might not even make a trade over the course of the year. If you’re waiting for the right setup, you only get 12 bars a year. So, you get that in half a month on the daily chart. And then when it comes to swing trading on the intraday charts, people start to pay closer attention to like the 30 minute chart to the hourly chart.

2:49
Then if you’re just looking at price action throughout the day, the 5 minute chart isn’t bad either. But I, I can’t really make a lot of trading decisions based off of the 5 minute chart, if any. It’s really just showing me what the current movement is in the stock for that particular moment in time that I’m looking at it. So here’s what you want to remember.

3:04
The further out the chart goes, the more reliable the technical analysis is gonna be. Like I said, I I don’t like the, the monthly chart strictly because it takes so long for a candle to develop. I, it takes a whole month, obviously on a monthly chart. A weekly takes some time too, but at least that’s like 5 days sometimes if it’s a holiday, it’s 4 days.

3:24
But nonetheless, you get at least 52 candles in a year versus 12 candles on a monthly chart. So there’s much more to work with on a weekly chart. So the more further out, it’s more reliable, but not necessarily going to fit in your time frame for the what you’re wanting to trade. That’s why. I like the daily so much.

3:39
Each day is a new candle. It shows you the personality for the day. So let’s say, for instance, there’s a really bad day in the market because some tech companies released earnings, right? And they totally missed expectations. But then the next day, the Federal Reserve cuts interest rates in the market rallies.

3:55
Well, you had those two big events combined into one and you’re not really seeing the full spectrum of emotions. You’re not seeing that big down candle and the, the big green candle that followed the next day. You’re not getting that in the weekly chart. Instead, what you’re getting is, is you’re getting that plus 3 additional days of trading that might have nothing to do with any of those two events that happened.

4:12
So it kind of smooths out the noise per se. But the daily, you’re gonna see those big price swings. You’re gonna see the stuff like the FOMC reaction. You’re going to see things when the jobless claims misses or when GDP beats. You’re gonna see all of that stuff or if Apple has a blowout earnings and it lifts the whole NASDAQ up, you’re gonna see all that stuff.

4:31
But you don’t see it as much in the weekly and you definitely don’t see it. The monthly chart. Now, you got to remember too, in just the opposite direction, the shorter the time frame, the less reliable. And you can go all the way down to the individual ticks. And I could tell you, if you start looking at the tick chart, there’s nothing reliable about that at all.

4:47
I don’t even know what I’m looking at when I look at that chart. One minute is entirely unreliable. The candles are entirely unreliable on that one minute chart, unless you’re just scalping. If you’re just trying to get, you know, in and out really quick, that’s one thing. I’m not a scalper. This really isn’t even a scalping podcast. So think about this.

5:03
A breakout on a 1 minute chart, is it gonna carry as much weight as a breakout on a 5 minute chart? No. A 5 minute chart will carry much more weight than a 1 minute chart will. And likewise, when you go to like a 30 minute chart, that’s gonna carry more weight than a 5 minute, hourly will carry more than a 30 minute chart. Then you get to the daily, that’s gonna trump all of the intraday charts, right?

5:21
And in the same sense, the, the, the weekly is going to have a little bit more of an impact on a breakout that’s been consolidating for 5 or 6 weeks than what you’re going to see on The daily chart. So there’s also like some strategies that go along these lines that are called like the triple time frame setups where you want them setting up on both like the hourly chart, the daily, and the weekly chart.

5:40
I don’t necessarily think that it’s necessary to, to hit it on all three of them because I think sometimes there may be a breakout set up there, but you might not necessarily see it as strongly in the weekly chart as you will see it on the 30 minute or the daily chart. And even though the weekly carries more weight, it’s not necessarily required in order to make a trade on the daily because the daily.

6:00
You can get in and out in under 5 days for a 10% profit and you don’t even have a full week’s worth of candles yet. I hope I’m not confusing you guys selling all this stuff. So, when I talk about this on all the podcasts, I have swingtradingthestockmarket.com. It’s the Patreon account that goes along with this podcast here.

6:16
So check that out, swingtradingthestockmarket.com, but The main timeframe that I use on that is the daily. When I go through all the Fang stocks, I use the daily chart. When I go through the trade setups, almost every one of them is based off of a daily chart. And when I create my watchlist, it’s gonna be based off of the daily chart too.

6:33
Now, the ones where I tend to, to look at different time frames on is with the indices. I like to kind of see what, what kind of trends might be developing under the surface that could impact other time frames. So because there’s such a, a long-term. range that you can look at with like a monthly chart on the S&P 500.

6:49
It does help to look at the monthly chart of the S&P 500, because you can go back a very, very long time, years and years and years into the past. And the same thing with the weekly chart. It can very much help. It helps put in perspective certain movements as well, like the tech bubble. You don’t need to see necessarily every daily candle to understand what the tech bubble did, but if you look at it from a weekly perspective, you can get a much better understanding of, uh, just how Assertive the market was during that time.

7:15
So yeah, on, on, on swing trade in the stock market, I pretty much use all daily charts for the most part, with the exception of when it starts getting into the stock market indices. And even then, I still rely predominantly on the daily charts. And I’ve, I’ve kind of touched on this already, but when it comes to different strategies, what’s the best charts to look at?

7:32
I would say for like long-term investing, again, it’s gonna fall along the lines of the weekly and the monthly. For the swing trader, it’s gonna be more of the, the daily chart, right? Maybe you’ll dive into the hourly chart a little bit, but predominantly, you’re looking at using the daily chart for your swing trades and obviously for day trading, it’s all during the day, you’re opening up during the day and you’re closing before the close, and so you’re gonna be more dependent on those intraday charts.

7:59
But you want to still remember that it’s not exclusive to those types of trading. It doesn’t mean with swing trading that you can’t take a look at the weekly chart, because the more time frames that do align with your trading, the better. All I’m just trying to say is, is that it’s not necessarily essential that they all line up.

8:16
Now, I say that, but then again, you don’t want the weekly chart to look like. It’s in this kind of like complete free for all, and you’ve got this little two-day bounce pattern setting up on the daily chart. No, that that might be a little bit out of bounds. Let, let the weekly maybe settle in a little bit, a couple of weeks or so before you start getting interested in a trade set up on the daily.

8:34
But as long as the weekly isn’t canceling you out, it’s OK if the weekly doesn’t necessarily show a breakout opportunity as well in the weekly when the daily’s showing an incredible trading opportunity. So there’s gonna be some overlap. There’s gonna be some overlap and, and that’s gonna be fine. So for me, I default, and this should be obvious because I’m a swing trader.

8:53
I don’t dive too much into the day trades, but I am a swing trader, by and large, and I’m gonna default to the daily, all my daily trade setups. When I’m going through like 500 to 1000 charts a day, I’m usually just looking at the daily chart. If the daily chart isn’t setting up, peace out.

9:10
I’m not looking at it. But what’s exciting to me is when I look at the daily chart and I flip over to the weekly, and it sets up even better. So hopefully with this podcast so far, I’m not going in circles there. I, when, when I’m talking this out, I kind of feel like I might be going around in circles. a little bit he’s like, wait, he says he likes the weekly chart, but then he says he doesn’t like the weekly chart.

9:27
And I’m not trying to convey that. All I’m just trying to say is as a daily trader, you have your go to time frame. That’s gonna be the daily chart, right? But it’s like kind of like that expression. It’s like I can either confirm or deny when, when you ask somebody in government, you can be like, oh, you know, FBI kill JFK and you can be like, I can either confirm or deny that, you know.

9:46
It’s, it’s kind of like that where You don’t need the weekly to confirm and you don’t need it to deny the trade setup. And again, there’s, there’s extremes for it, like in terms of the denial, if the weekly is just looking like an absolute bloodbath.

10:02
OK, maybe, maybe just go on to another chart. There’s always another trade out there. But in general, as long as that’s not happening, you don’t need it to confirm or deny the trade, but man, if you get a good daily trade set up and the weekly shows the same thing, that’s just like a cherry on top. That’s good stuff.

10:18
There’s nothing wrong with that. Now what about stops? because think about how many times that you get into a trade setup, right? And you get that really good trade setup. Let’s say you get in at like $100 a share, and all of a sudden this thing’s trading at like 123 days later, like, holy cow, this is good, but really, it looks like on the daily chart because it just broke out a couple of days ago, the nearest level of support is like $95.

10:40
And you’re thinking to yourself, do I really want to be putting a stop loss below $95 when this Thing sitting at 120. No, no, you definitely don’t want to do that. You want to make sure you’re protecting profits. But when you look at the daily chart, you can’t find anything there. So what do you do? Well, you can drill down further into some of these charts.

10:57
Sometimes when you look at like the 5-minute chart or the 30 minute chart, you can start seeing these gaps where you can see, man, if price starts to falter and it drops down into this gap, I want nothing to do with that because it’s gonna result in a likely gap fill. Now, a gap fill is basically where the previous day of trading.

11:21
It closes at $100 and I’m just giving you like an arbitrary number here, but let’s say previous day of trading a stock closes at $100 and the next day it opens up at $110. Well, there’s like a $10 gap where there wasn’t really any regular hour trading in, in that area. Now, charts like to typically fill those gaps. So when you start seeing a stock start to fill that gap, you don’t really want any part of it.

11:38
So that can show you a good reason to put a stop loss below it if there’s like a huge gap. And you can see it most clearly, not only on the daily chart, but even more so on like a 5 minute or a 30 minute chart. Man, guys, this Woodford reserve double oak, not to get off course here. It is freaking good. I really like it. That caramel taste, really good. Because oftentimes, especially if I can’t get an intraday to provide any guidance on where to put a stop loss, sometimes I’ll use on the daily chart the simple moving averages like a 5 day moving average if a stock’s getting parabolic, I’ll be like, hey, if it breaks below the 5 day moving average and closes below it, I’ll get out.

12:09
But sometimes even then it doesn’t really provide a lot of clear direction. So what I’ll often go to, like I said, is the intraday charts, and we talked about the gap fill, but oftentimes you can spot trend lines on those 30 minute and hourly charts to where you know, OK, if that Trend breaks, that might be a good reason to get out of the stock there.

12:25
Again, you’re looking for the ability to protect your profits on a trade. So if you can’t find it on daily, you got to drill down into the intraday charts. Well, if you can’t find it on the daily, good chance you won’t find it on the weekly or the monthly because those bars are so much bigger and they, and they cover so much more price action.

12:42
Now, I’ll always say this. When it comes to intraday stop loss placement versus daily stop loss placement, your daily’s always gonna be stronger. It’s always gonna be stronger. Entraday can help, and it can help identify places to put your stop loss when the daily’s not providing it, but if you can find it on the daily, always way better.

13:00
So going forward, swing trading, the daily chart, long-term investing, that’s gonna be more of your like weekly charts. It doesn’t mean as a long-term investor, you can’t, like I said, there’s overlap. It doesn’t mean that you can’t go into other time frames. I do it all the time. But those weekly charts for long-term investing can be gold.

13:17
Swing trading, it should be primarily off of the daily chart. And then of course your day trading, it has to be off of intradays for the most part. It doesn’t mean that you don’t reference the daily chart, and you should, but in terms of entries, you’re gonna be going off of those intraday charts. And if it’s not really confirming on the intraday chart, why in the world would you buy it on the daily chart, right?

13:36
So that’s gonna do it for today. If you guys have any questions, make sure to email me, ryan@shareplanner.com. I also want to take a moment to to thank you guys for being so dedicated to this podcast. I can’t tell you how much that means to me. You guys have given me so many good reviews, and let me tell you, those reviews mean the world to me.

13:52
They really do. They, they give me so much motivation for going forward. If you haven’t done it yet, I highly encourage you to do it. But you guys rock, man. You guys have really, uh, made dreams come true for me on this podcast. This is something I started about 3 years ago and I was gonna be excited if I had 10 people listening to me on this podcast.

14:07
And for the month of Jane. January there was 83,000 of you that did. And, uh, I just, I can’t even begin to put into words how much that means. Um, you guys have been sensational. The feedback that you guys have provided me has been such an encouragement, not just to my trading, not just to this podcast, but just to the life in general.

14:24
It really has. You guys, you guys do mean a lot and I can’t express to you guys enough what you guys have. Meant to me over the years. So thank you for that. Thank you for making 2020 so successful, for making 2021 off to such a good start. And it’s the number 31 podcast as of this recording and the investing categories.

14:41
So that’s pretty cool. I don’t even know what to think about that yet. I’ll have to sleep on it. So thank you guys. Again, if you have any questions, ryan@shareplanner.com. God bless each and every one of you.