The 2 Most Important Time Frames for Swing Traders 15

I remember when I first started trading.

I read books that said you should “pick your main time frame and then look at the time frame above it and the time frame below it”. So, for example, a swing trader would pick the daily time frame as his main time frame. Then, he or she would pick the weekly (above) and some intra day time frame (below).

A day trader might use the 5 minute time frame as the main time frame. Then look at the 15 minute (above) and 1 minute (below) time frames.

This is a nice theory but I have a problem with it.

I am a swing trader. Therefore my main time frame is the daily chart. This is where I spot trading opportunities. So good, so far. But conventional wisdom says that I should be looking at the weekly chart. But why? If I can see where the next resistance area is on the daily chart, then of what use is the weekly chart?

The weekly time frame is of very little use to me. The only time I would use the weekly chart is if I can’t see the next resistance point on the daily chart. Then I would move to the weekly chart to see where it is.

So, I don’t look at the weekly time frame very often. The two main time frames that I look at are the daily and the hourly chart. Take a look at the following chart…

Jack in the Box Daily Chart

This is a nice swing trap chart pattern that I was going to buy (I couldn’t buy it because my brokers website was down near the end of the day. So annoying!) There is no reason for me to look at the weekly chart because I can see where the next resistance level is.

Now look at the hourly chart:

Jack in the Box Hourly Chart

There is a nice hammer at the end of the trading day that flushes out other traders. This is all I would need to pull the trigger. In order to get the best possible price, I might move down to a lower time frame such as the 15 minute chart. But it isn’t critical.

So, for me, the two most important time frames are the daily and the hourly charts. What about you? What time frames do you think are the most important?

15 thoughts on “The 2 Most Important Time Frames for Swing Traders

  1. Mike Nov 4, 2010 1:08 pm

    Daily and hourly in general for me as well. I do tend to gravitate to the 30m more than the hourly but as you said, not so critical.

    I do still look at the weekly for the S & P though.

  2. Christian Nov 5, 2010 5:38 am

    i have 3 screens at which i look, my main screen is the daily chart, when i see smth interesting i also look at the hourly, sometimes the 15minutes (just to get a nicer picture).

    i have 2 secondary charts, the 2day and the weekly, i use them as “exclusion criteria”, the 2 day is nothing else than zooming out the daily (just more convinient). you can see on the monthly 2 daily quite beautful if the stock is just a “index follower” or has its own trend.

  3. Lewis Nov 6, 2010 1:21 am

    Hi, if I only has the morning to work with (as I am in Asia), can I just use daily for direction and 15min for entry?

  4. mythrules Nov 9, 2010 2:54 pm

    Craig

    Nice to see you post again after a long absence! Thank you.

    Must say that I agree. I will look at the weekly on a regular basis – but mostly for overall context, not for making a specific trading decision. Some time the weekly will show resistance to be more significant that it looks on the daily, or will give me an overall sense of where the market is headed – but again – doesn’t really influence most entry and exit decisions.

    I think you touch on the issue of perspective. Maintaining the correct perspective is one of the hardest things about trading. I think one way to do it is decide on your holding period. If you are swing trading, then the daily is key. Any information, news, talking head banter, fundamental information becomes much easier to filter out (ie – ignore) unless for some reason it impacts your time frame.

  5. jeff Nov 11, 2010 8:38 pm

    I look at multiple time frames. Wkly/daily to identify strength in the charts, and 15/60min to time the entry.

    I also have two entries, one on the 15 and one on the 60min in case I miss the first one.

    I think it’s whatever each is comfortable with.

  6. Garret Capler Nov 16, 2010 8:42 pm

    No website yet, but just wanted to compliment you on yours. Very nice Craig.

  7. Mike Dec 2, 2010 1:46 pm

    I look primarily at the daily and weekly. Yes, you can often see S and R on the daily, but the weekly helps me see what “stage” the market is in better. Utilizing Stan Weinstein’s stage analysis approach, trading stocks in stage 2 generally give a higher probability trade. I also utilize the 10 week moving average as promoted by O’Neal for finding stocks that might be ready to move. So, in that respect, I think the weekly gives info. that is not available on the daily.

  8. Mike Dec 5, 2010 7:52 pm

    I only look at the daily chart.
    I don’t look at the hourly chart as I think there is not enough volume per candle to represent what is going on.

    By the way, I am interested in apply for margin, and hence allowing me to short stocks (e.g. FSLR at its second pullback).

    Can anyone tell me what the typical borrowing fee is for short selling?

    Thanks for the post Craig.

    • Mike Dec 5, 2010 9:01 pm

      Interest only applies if you actually borrow funds to short. If you get the margin account you can short with your own capital and you will not incur any interest payments.

      • Mike Dec 6, 2010 8:15 am

        I am not borrowing funds to short, as I am shorting with my own capital. Therefore there is no interest to pay.

        What about “borrowing fee”? Don’t you have to pay a “borrowing fee” to the stock lender?

        • Mike Dec 6, 2010 8:56 am

          I use Fidelity and have never paid a borrowing fee when I short. Best bet would be to talk to your broker and make sure they do not have addtional fees etc.

  9. Aleem Khan Dec 27, 2010 3:04 pm

    Hi Craig

    Nice article, I have been swing trading for few years and been using daily for finding chart patterns and hourly for timing. Never used weekly, will look into it.

    Please visit my blog at http://bestswingtradingstocks.com where I post my stock pics.

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