Price patterns in relation to intraday charts
Intraday data is based on time frames from the 4 hours and below. For these time frames, the short-term trend in the daily charts will be seen as the long-term trend in the intraday time frames.
For those who are keen to trade intraday time frames, they need to know that patterns on these time frames or charts have three principal differences from their long-term counterparts.
1. Their effect is of much shorter duration.
2. Price trends in these time frames or charts are much more influenced by instant reaction to news events than is their longer-term counterparts. Therefore, decisions are not well thought-out when trading these extremely short-term charts but they develop as emotional, knee-jerk reactions.
3. Intraday price action can be easily manipulated. Therefore, their price data are much more erratic and generally less reliable than those that appear in longer-term time frames.
These are the reasons why I have choose not to trade the intraday charts. When I first started out in trading, I tried out the intraday charts, especially the 5 minutes and 15 minutes time frames, but the emotional cost of reacting to every split-second movement of price data was high for me. That does not mean you cannot do it. You just need to understand the costs involved in trading intraday charts.
The chart below, of EURUSD, is an illustrative 5 minutes chart of how volatility could suddenly change on the whim of emotions due to news. This is based on the 169th Non-Farm payroll (NFP) data which were released for the USA on 8th May, 2020.
For those who are keen to trade intraday time frames, they need to know that patterns on these time frames or charts have three principal differences from their long-term counterparts.
1. Their effect is of much shorter duration.
2. Price trends in these time frames or charts are much more influenced by instant reaction to news events than is their longer-term counterparts. Therefore, decisions are not well thought-out when trading these extremely short-term charts but they develop as emotional, knee-jerk reactions.
3. Intraday price action can be easily manipulated. Therefore, their price data are much more erratic and generally less reliable than those that appear in longer-term time frames.
These are the reasons why I have choose not to trade the intraday charts. When I first started out in trading, I tried out the intraday charts, especially the 5 minutes and 15 minutes time frames, but the emotional cost of reacting to every split-second movement of price data was high for me. That does not mean you cannot do it. You just need to understand the costs involved in trading intraday charts.
The chart below, of EURUSD, is an illustrative 5 minutes chart of how volatility could suddenly change on the whim of emotions due to news. This is based on the 169th Non-Farm payroll (NFP) data which were released for the USA on 8th May, 2020.
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