The BEST Time Frame Trading Futures, Forex, Stocks & Crypto

I've been trading for eight years now and once I implemented this change into my trading I saw a complete difference in how I executed and it had to do with what time frame that I was trading with I started taking better entries and exits I wasn't getting stopped out of Trades and my risk to reward became a lot better by implementing this time frame into my trading so the first thing we have to understand is what time frame should we use and what story is it telling us about the market now no matter if you use a 2minute 5 minute 30 minute I'm going to explain what is the best for me but no matter what time frame you use the data that the market is presenting will always be the same here we have a five minute chart and we can see a clear rejection noted by these green lines of three different attempts prior to a long extended drop to the downside now to the right side is the same exact chart however on each 30 minute candle it's going to show us Six 5minute Candles so the charts are different but the data is the same on the 30- minute chart we could see three different candles that H also has rejected those prices followed by a very large drop to the downside so regardless of no matter what time frame you use the data will always be the same price and volume does not change what caused the market to reject here at these highs so we see a high of 5,665 on a 5minute chart or a 30-minute chart what caused that high to form and what caused the market to sell off does not change regardless of the time frame just as you flip through a 5 minute 30 minute 4 Hour the data will be organized a little differently the best thing that's helped me is understanding the type of time frame Trader you are if you're a day trader maybe you're looking to capitalize on a move that's going to happen in the next 2 or 3 hours or you're a trend Trader the Market's making higher highs and higher lows and you want to capitalize on the bullish uptrend well then higher time frame will work out for you the best because you're not so concerned about what's happening in the near short-term present moment or past moment if you're a short-term scalper or a day trader smaller time frame is going to work out for you the best because you're so concerned on what's occurring in the near future and the closest past moment if you're a long-term investor and you're looking to hold let's just say Tesla for the next 5 years well you're not going to care what's happening on a 30-minute chart if you're in it for the long run and looking to capitalize on the next bullish uh rally up so knowing how you are trading and knowing the type of time frame Trader you are is vital because no matter what time frame you use it's simply going to represent the perception of the market participants and the perception of the prices in that specified time if you're scalping and you're looking to capitalize on what's going to happen in in the next 5 minutes then you're not going to be so concerned on a 30-minute chart or if you're a trend Trader and you're watching the trend form on a 30-minute chart you're not going to be so concerned on a one minute chart so understanding the trader you are is key in developing the best time frame to use also briefly we have to understand how the market moves so simply prices change due to buying and selling efforts prices don't change because a f minute chart had a really large green candle to the upside where prices don't sell off because we see a really large drop and a really bloody red candle to the downside prices simply change and the root cause and the underlying effect to it is because traders who are buying and selling and transacting so price affects volume and volume affects price and we can read this by the transactions or the number of Traders size buying or selling so now going back to economics class 101 supply and demand if demand exceeds Supply then simply the market moves up if we have a greater demand for a product but not enough Supply then simply the market has to raise its prices to meet the demand of buyers and regardless of the time frame we are going to see this with a green candle 5 minute 1 minute 1 hour if the and exceed Supply in that specified time we are going to see a green candle up because what a green candle tells us is the market closed higher than where we opened at just to visually see this if the market moves down we form that red candle down what that means volume wise because again how price affects volume this is the key aspect to this that no matter the time frame if the market goes down that means there are more aggressive sellers than there are passive buyers so if you see a move down that means there are more Traders taking liquidity away from the market then there are Traders putting liquidity on the market for sale and if you really want to dig deeper why these candles do form is because of the volume getting transacted behind the scenes essentially look at a candle as a closed curtain we don't know what's going on behind the stage but as soon as the candles are opened and we can see behind the driving forces of what's opening the curtain we're going to know what's going on behind the scenes and behind the stage and that is when the best trades can be put on so why this candle or why the market moves down is because there are more selling activity than there is buying activity flip it now if the market moves up and the market forms a green candle that means there are more aggressive buyers than passive sellers regardless of that time frame you can validate this by looking at the volume transacted of that Candlestick chart so now going back to this if you want to pause the video screenshot this these are essentially the time frames that I use to chart levels of Interest developed only from a Candlestick chart now this is the time frame that I use to trade this is what I call the now now I'm very big into the present moment because as Traders we're not so concerned about the past we are not so caught up in what's going to happen in the future we are concerned about now because I am a shortterm scalper in the market I'm looking to capitalize on very short-term price fluctuations I don't care what happens tomorrow I don't care what happens in the next six hours I care what's going on right now because that is going to be the best information that the market is presenting to me so when people ask me hey Carmine what time frame do you use to confirm your setups what time frame chart do you use to buy or sell the time frame that I use is the now and you are not going to find the Now from a Candlestick chart because the now could only be displayed by understanding the buying and selling activity that's entering the market at this second in the present moment of the now so the time frame chart that I use and I found to work out for me the best is the time frame of the now via the order flow or reading how price responds or Price reflects the volume transactions occurring and entering or exiting the market the now gives me all the information that I need so let's just say we see Tesla breaking above a resistance level starting to move up the buying is very strong the volume is entering the market then I'm going to get in right at that moment I'm not going to be waiting for let's just say a f minute chart to break out and close or I'm not going to wait for a 15minute chart to show me a lower Wick indicating that I should get in no I'm getting in when I see the now or I see the buying volume transacting saying hey Carmine there's buyers here buying above your resistance level let's get in right now and put risk on now this also helps me and protects me from not getting faked out when you use a Candlestick chart it's very easy to get faked out you are prone to more fake outs with the Candlestick chart than you are with the tape now I still get faked out there's still are setups that I ENT there and they don't work and I lose on it and my interpretation of the data was incorrect however it puts me in the position where the probabilities are in my favor more than a Candlestick chart so if I was looking to get long Tesla above its resistance level I can't see if that rally up and that green candle up was on weak buying what I mean by by that is you could have sellers who are willing to sell at higher prices that make the market gravitate higher making it look strong but it's really not strong at all and there there's a seller in the market looking to get in at higher prices cuz he wants to sell at the highest price possible something that we cannot see on a time frame candle chart relying on a time frame does not validate what's causing the market to rally and break that resistance level the market doesn't rally up and break that resistance because the five minute was a green candle the market rallies up and breaks that resistance level because the buying was aggressive however let's just say the buying is not aggressive and it's really weak then I would not be buying that breakout this all gets confirmed in the now or in that present moment so this is a really good example of this I see a lot of Traders Mark highs Mark lows and they automatically get long or short if it breaks that obvious resistance level now how many of you have ever bought a breakout Up breakout down as soon as you get in the market reverses and you stop out for a loss let me know in the comments number one but number two if you were to use some sort of confirmation by the volume you would not get faked out as easily obvious levels are prone for areas to build liquidity for other traders who are smart by reading the volume to take that liquidity reverse the setup and them to profit and you to lose on it even myself in this example we can see the market breaking above 5045 is this purple line now looking at the time in sales which is a tool that represents the volume getting transacted at specified prices every single one of these prices here is right at this 5,045 level when we broke above it around 11:30 to about 12:00 Eastern Time directly breaking out Above This level if we were to wait for a 5 minute chart let's just hypothetically speak and we don't know what happens next but we take the market long just here because it breaks our resistance level for no other reason than we see a green candle well validating what I've been saying so far you would have seen a flurry of selling activity directly above this resistance level number one that would have prevented me from taking a long trade so it's a defensive mechanism and number two it may have caused me to get confirmation to say hey Carmine let's short this move above resistance because a lot of people will be buying it but we are trading with smarter participants that we are looking to short it and capitalize on a downside move even looking at a horizontal volume the volume did not increase here at all in fact the volume kept decreasing as the market was rallying and breaking up much higher as well when I talk about the now this is what I'm talking about this cannot be qualified in a time frame this could be qualified of what's happening right now and you're not going to be able to see that from a chart from a Candlestick chart also I see a lot of Traders saying okay let me wait for a Candlestick to close for me to long a move they see the market rallying they wait for the level to break and they say okay the 5-minute candle just closed here let me get long right here cuz the 5 minute candle closed waiting for a candle to close what does that have to do with validating if that move is strong or if that move is weak what does a time frame have to say if buyers or sellers are strong because what if a candle closes right at that level but the volume is still rejecting let's just say you're looking at a f minute chart and the market breaks out on 4 minutes and 45 seconds of that candle meaning we have 15 seconds left until that candle closes but because it happened in the last 15 seconds before that candle bar closes you are getting it long just because of time for me that data is skewed because you cannot read the volume the volume would have told me that it is still rejecting time has nothing to do with invalidating a trading thesis unless you're using a market profile time does not have much influence on the analysis volume compared compared to price does I'm pretty curious how many of you wait for a Candlestick close to stop you out of a trade you wait for a candle five minute candle to close above or below your level and for some people if they have a strategy it might work out for them but again I'm explaining what works for me personally the best because I am a short-term scalper this was an actual trade that I took on the S&P 500 and I'm going to show you a live trading video of me taking this however what you're going to see here is my stop loss is above this candle the market eventually breaks above my stop loss however the selling was strong and the buying was weak which made me stay in this trade so I'm in short right here I'm capitalizing on a downside move a lot of people what they will do is they will wait for a candle to close above or below their stop loss in this example it's above uh which right here so now we saw a candle close above my stop loss and and if I were to wait for a candle to close I would be out of this position if I got out of that position I would not have been able to capitalize on this downside selloff also time frame charts skew risk of reward and I would say risk management is the number one aspect to every single trading strategy because let's say the Market's selling off and I want to capitalize on taking the market long down here at my demand Zone what people will do is they will see the market hit their level they will wait for it to move up and wait for that close or wait for the five minute chart to show a lower Wick and once the lower Wick is put in then they get in just because there's a lower wick on a 5-minute chart well a lot of people have to realize why a lower Wick forms or why a higher Wick forms or why a bounce actually occurs is because there is strong buying at the low so wouldn't it be smart to buy there as it's happening in that present moment instead of waiting for the 5 minutes chart or a two-minute chart or a three minute chart to close or show a lower Wick indicating that a wick is present and buying pressure is there why not get in when the buying pressure is there instead of waiting for the candle or time to tell us when it is there what if it's too late if it's late it's going to skew our RIS of reward in this example here we see the S&P 500 selling off and coming into our demand Zone and breaking the yesterday's low what a lot of people will do is if you use a 3 minute 5 minute whatever to case may be we'll wait for a lower Wick or wait for the candle to bounce off the level and wait for it to close now if you were to do that that would put you in the position of getting long on the S&P 500 at 5024 call it 5025 at this yellow oval right here now what that would be or what that would mean is for us to be wrong on this analysis we would have to put our stop loss under the low of day so we're long at 5,25 where my cursor's at our stop loss is at the low we are risking 12 points which means we have to get at least 24 points to achieve a 2:1 risk reward ratio this is if we were doing our analysis on a Candlestick chart now pulling up the tape here this is just a heat map and what red bubbles show are aggressive Sellers and what green bubble show are aggressive buyers the lines underprice show passive buyers and the L above price show passive sellers even if we have selling coming into the market selling means somebody also has to be buying so down here at these lows we can see really aggressive selling with no follow through and a larger bid getting filled remember there's a seller and a buyer to every transaction so if there is more aggressive sellers moving the market lower getting absorbed with no follow through that that means there is actually a buyer entering the market despite all the selling entering in this example why the lower Wick forms is a very large drop to the downside and a very strong upside reversal again if we were to wait for the five minute candle to close you could even use a one minute or a two-minute in this instance and my claim will be the same again once I implemented this change into my trading it made a huge difference in how I bought and sold because I'm a short-term scalper looking to capitalize on short-term price fluctuations even if we were to wait for the one minute to close we would get long up here at the 509s 5020s if we were to wait for a two-minute to close we would get in Long here at the 20 uh 50 22s again still putting our a stop loss under the 53s however if we were to use the tape in the present moment and zoom in we would see all this selling activity getting absorbed by a buyer and we could could enter directly at that moment call it 5016 507 right and what that would do is is going now to even a smaller time frame such as a one minute chart that would put us in the position to not get long at the 25s but it would put us in the position to get long down here at these 17s or at these 18s when the buying came in in that present moment of the now again time has no influence to a change of price time has an influence to the data that you are watching on that Candlestick chart if we were to get long at the 507s we would have a smaller risk and a higher reward as Traders we are not putting ourselves in the position to have lower reward and higher risk it has to be the opposite approach so again know the time frame Trader that you are shortterm if you're a day trader Into the Now doesn't really matter to you that much if you're looking to hold for the next week if you're an intraday Trader short-term scalper for me personally this is what works out for me best and remember it's only about how the data is organized price and volume does not change if you got any value out of this I would appreciate a thumbs up subscribe to the channel and comment if you have any questions I'll be going through the comments peace

Channel: Carmine Rosato

Views: 25,137

Keywords: carmine rosato, supply and demand, ricky gutierrez, learn plan profit, ross cameron, warrior trading, tim sykes, day trading, stocks, stock market, day trading recap, trading recap, thinkorswim, tdameritrade, day trading time frame, supply and demand trading

Id: -LDLqAhUiBk

Length: 19min 11sec (1151 seconds)

Published: Sun Feb 25 2024