Often many day traders use only a small time-frame in order to find their daily scalps. Many day traders that we meet prefer the 1, 3, or 5 minute time frames. Our motto is use whatever works as long as you are comfortable with it and it produces results. There is always more than one way to skin a cat. However, the one mistake that we see many traders make is that they do not look back in time or reference the larger time frame to find the resistance spot . For example, today the stock VVUS was gaped higher in the premarket and opened at the high of the day. Many amateur or new traders went long the stock right at the opening bell. Our traders spotted a nice gap window by looking at the 60 minute chart going back to October 27th 2009 at a price of $9.50 – $9.70. This was the key resistance level and VVUS has sold off since that opening print.
USE MULTIPLE TIME FRAMES TO FIND THE CRITICAL SUPPORT/ RESISTANCE LEVELS ON THE LARGER TIME FRAMES THAT CANNOT BE SEEN ON THE SMALLER ONES.
