Option Investor
Trader's Corner

Got the Right Time?

HAVING TROUBLE PRINTING?
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Right time interval, that is, for your trading style and the security you trade. Tweaking the time intervals you watch can pinpoint entries and exits, minimize whipsawed trades and help set profit targets.

Many traders like to watch an underlying's behavior with respect to the 100/130-ema's. They often find that those averages correspond with resistance or support levels. Scalpers may watch their underlying with respect to five-minute charts; swing traders who hold a day or two may watch with respect to thirty- or sixty-minute charts and position traders may even use daily charts.

Imagine that you're a daytrader who occasionally holds overnight, and you discover something on WalMart's (WMT) five-minute chart one Thursday evening.

Annotated Five-Minute Chart of Wal Mart:


 

Switching to a two-minute chart provides easy entry and exit information.

Annotated Two-Minute Chart of Wal Mart:


 

Tweaking time intervals can help prevent whipsawed trades. Imagine that you use CCI moves through the zero line to trigger trades.

Annotated Fifteen-Minute Chart of Wal Mart:


 

Annotated 30-Minute Chart for Wal_Mart:


 

Dialing up or down a time interval can sometimes help set upside or downside targets.

Annotated Five-Minute Chart of the OEX:


 

Annotated Fifteen-Minute Chart of the OEX:


 

The suggestion to dial up to set new upside or downside targets comes with a caution, however. A trader should not dial up or down to avoid taking a stop that should be taken. Dialing up or down to set a new profit target would be acceptable; dialing up or down to avoid taking a stop would not.

Try dialing to a shorter-time interval chart when an underlying trends strongly and dialing to a longer-time interval for a slower-moving entity. Tweak the time intervals you watch according to the performance of the underlying, its characteristics (trending or range-bound) on a particular trading period being watched, and trading style. When a trade is working, try dialing up or down to set new profit targets. That's how to find the right time.

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