Traders make their money (or lose it) on price oscillations. Price oscillations vary with time frame. Generally speaking, the shorter the time frame the shorter the oscillation amplitude will be – and vice versa.

This is true whether you use minute bars – or as I do, tick bars – to look at different time frames. In my trading method, time frames are variable – I use tick bars and the time it takes for a specific number of ticks can vary significantly. For example, if something causes the market to suddenly accelerate trading activity by a factor of ten – and I have seen it happen in most any market – my tick bar charts will have ten bars in the same time span that minute bars only display a single bar. To me using tick bars is a no brainer – all technical indicators used in making trading decisions are calculated and graphed on a bar of bar basis. More bars mean more information – more information used properly leads to better trading decisions.

And am often asked why I routine display and monitor three different intra-day time frames (tick bar counts). In paragraph one I answered that – oscillations are different for different time frames. I use a primary intra-day chart that is set to display about 12-18 bars per day (twenty-four hour day). For most markets my other time frames will be one tenth of the previous time frame. For example if I use 5000 ticks per bar for my primary intra-day bar, my other two charts would be 500 ticks per bar and 50 ticks per bar respectively.

Depending on price oscillations, my trade will be constructed on the primary intra-day chart or the secondary chart. The third – and fastest chart – is rarely tradable, but is used to pick a entry point when trading and/or deciding when to exit.

Trading a time frame with price oscillations that have small amplitudes is an invitation to losing money. A tradable oscillation should be sufficient that capturing 80% will give you a profit of at least two times your risk plus the cost of making the trade (spread and commissions).

Routinely watching three charts of considerable difference in time span (trading activity) gives me a much better feel for the music of the market.

You can learn much more about this trading method by reading my eBook, See the Music of the Market. We have priced it so anyone can afford it.


One Response to Price Oscillations and Time Frames

  1. Thank you for this post It is indeed very good to know

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