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FOREX DAY TRADING TIME FRAMES
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For the FX currencies, I watch at least two markets in two time periods. Generally, I follow the euro currency, the yen, and the British pound. For day trading, I use the 15-minute time frame for my dominant trend and the 5-minute time frame for my short-term as a trigger to go with the 15-minute signal; and I use the 5-minute time period to exit a position in my day trad ing. I have my software preprogram, which automatically calculates and fil ters the pivot point lines on my charts. This software also comes complete with the monthly and weekly numbers, which are a tremendous help in identifying a confluence or layer of support (S) or resistance (R) levels in the various time frames. These are generally set with the R-1 and S-1 calcu lations. The graph in Figure 9.1 represents the euro on the left and the pound on the right. When I have a 5-minute trigger confirming a 15-minute time period signal, that tends to be the highest probability signal. This is the case especially when we have a sell signal based on a low close doji trigger when it coincides at or near the pivot point resistance numbers. If you look on the bottom left chart in Figure 9.1, you will see the arrow confirming a sell on the 15-minute chart confirming a textbook low close doji signal. No tice that the market moves sideways for 10 more consecutive periods, but the system is still identifying that the euro is in a sell mode. The top right chart is a 5-minute period, and as you can see it generates buy and sell signals. The key thing to remember is that when the 15-minute time period is in a sell mode, take the 5-minute sell signals.

The chart on the bottom right in Figure 9.1 is the British pound; coinci dently, it had generated the sell signals at the corresponding time period to the euro. Here we have a great example of how to take advantage of trad ing using a tandem, or like, market to help confirm a signal in a specific market sector. This shows that there was strength in the U.S. dollar at that precise moment, which should give you a higher degree of confidence that a bigger move or a sell-off may be in the works. As such, the market did in deed experience a nice day trade. Now notice that the corresponding 5 minute period in the upper right-hand corner generates buy and sell signals as illustrated by the triangles. If the 15-minute period is in sell mode (triangles point down), then take the sell signals in the 5-minute time period.

As a day trader, you can watch the 60-minute charts; but if you are in a trade based on the 5- and 15-minute periods, these are the time frames you need to continue monitoring for that specific trade. Keeping an eye on the 60-minute charts will help you identify the current trend and a potential change in trend if a moving average crossover occurs. Keep in mind your profit objectives and where you are in the trade as it relates to the average true range. If the euro is already down 50 PIPs when a sell signal is trig gered, the odds favor that your potential for profits is only 36 PIPs or less if the average true range (ATR) is 86 PIPs based on the past 14 trading days. The breakdown in Table 9.1 may help guide you on what to watch for and the time periods to follow.

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