My goal is that by the end of this video, you'll have a solvent understanding of which time frame is the most important for you to focus on, as well as how you could use the other time frame to do improve the consistency of your trades. As always, the only thing that I ask for in return is that you hit that beautiful like button and boy it is beautiful. Also, if you see value in this video, subscribe for more short, sweet and simplified videos on how to trade the stock market. As a general rule of thumb to start you with, you should choose and focus on the time frame that matches the time that you plan to hold set position.

For example, if you're taking a day trade, you should be focusing on the day trade time span. And if you're looking to take a five-day long swing trade for example, then look at the five day long charts. If you think about this logically, it makes intuitive sense. If you're going to be taking, say, a 10 day position, it makes more sense to use the 10 day chart than the one day chart.

Who cares if the intraday chart is indicating that the stock is oversold when the 10 day chart still shows it at fair value? Now you know the C+ student way of using timeframes to trade stocks. Knowing which time frame to focus on is honestly two-thirds of the battle. But if you want to be really consistent in your trades, you're going to want to pay attention to the others while still focusing on the main time frame. So let me go ahead and break this down with an analogy.

Say you have a beautiful wife or husband that you are completely dedicated to and are super happy with. Now it makes sense that you'd want to focus on her, right? You'd make sense that you'd want to focus your main attention on somebody. That means a lot to you. It's your super dedicated to.

But now say that you're out on the street walking in the town and you see two other beautiful time frames I Mean girls walking by. Now there's nothing wrong with being a little chart curious. So you go up and talk to those girls and you find that oh, they have a lot to offer as well. But the key here is that if you want a chance to peek at their price action, going to still need to focus on your wife because if you don't you'll piss her off and then you'll lose half of your money.

Now the only difference between this analogy and reality is that if you're ignoring the main time frame when trading, you're probably going to lose more than half your money. So to fix this problem, what you should do is plan your entry and exit points using multiple time frames. Focus on your main time frame once you've already taken me position. So now, TV Why is the perfect example of why this is relevant? If you pull up the intraday chart, we see that the share price is overbought, but if you pull up the year chart, its oversold.

and if you pull up the 10-day chart, it's about at fair value and I haven't even mentioned yet the other indicators such as the MACD so I can see how this can get confusing. So to solve this problem, you're first going to need to decide the type of position that best suits the stock. Now, going back to the one-day one-minute chart, we can clearly see that this isn't going to be a good position to take because it's overbought. and while we also could wait to see if it dips back down to oversold, is really only like 75 cents of upward potential.

So not a great move there unless you're scalping with like $20,000 or something like that. Now let's open up the 20-day chart now. 20-day we see a little bit more upward potential all the way to 25 59 and the arms line is also indicating that we are in the fair value range. but you may notice that the stock doesn't have a history in this time chart of going from fair value to overbought.

So that means if we want to keep the odds in our favor, we should aim for an oversold position since the stock price has a history of bouncing from oversold to fair value. Now that we've identified that, the odds are in our favor with the 20-day chart, if we can get in when it's oversold, we can now declare that we are considering in this for a swing position, and thus this is the chart we want to focus on. We're also going to want to look at the other charts to plan our execution points. So if we open up the one-year chart, we now see that while in the last several weeks the share prices at fair value, it's actually very oversold when considering the year long price action.

So the reason this is important to us is not because of this massive amount of upward potential. Because remember, we're focusing on the 20-day chart, and thus, this long-term upward potential isn't for us, but it's for long-term holders to take into consideration. But the reason that we're still looking at it is because of this long-term resistance, which has this sort of gravitational pull that pulls up the price action once the stock starts trending up. Now, if this sounds weird, give me one second to explain how this is intuitive, since people and institutions know that the price action had already been at a much higher level.

When the shares actually start showing signs of horizon and actually start trending up, the effect is multiplied Because these people, institutions and algorithms are thinking that it's heading, act towards long-term resistance, and it acts as like sort of a gravitational pull. Now, if you compare this to a stock that is near, its all-time high as you're not going to have the same thing because every percent increase will be treading new waters versus if you have a stock that had already treaded these waters, people know that they they note that right and then all of a sudden you have this sort of like multiplication effect as it starts treaded back to previously visited waters just to hit this point home. If a stock price has already treaded these waters before people then think it's a lot easier for it to do it a second time and it becomes sort of a self-fulfilling prophecy. Of course if people didn't feel this way it wouldn't be that wouldn't be the case.

But that's true for a lot of things with technical analysis because a lot of the things that we talked about don't really have any like objective reason to them other than the fact that other people uphold them and it becomes reality because so many people use these same techniques and if you can figure out how to take advantage of emotional situations and you can figure out how to make a profit. Now that being said, the key here is that you want the stock price to be showing signs of an uptrend for this effect to take place because if it's not showing signs of an uptrend, it doesn't matter how far up the price was in the past, investors won't care because it just looks like another failing company, right? If you see a chart that's going down for the last three years, if you don't see signs of an uptrend, if you don't see signs of an uptrend, why would you invest in it? So now, the reason that this long-term upward potential is important is because if we go back to our 20-day chart, we now know that overall there's upward gravitational pull towards resistance, with which will become much more relevant if we start seeing warning signs of an uptrend. Another thing is that looking at the long-term chart also tells us that hey, look, this sell-off has been happening for a while. I should probably note that, right, and that kind of beats the point home that in order for me to plan an execution point, I'm going to want to seize clear signs of a reversal because if I don't have that sort of confirmation of pattern, that means that the price action might just keep treading down and I might as a result, lose my investment.

Okay, so say we're planning on taking a day position on Krone Say you see signs of an uptrend right about here after zooming in on the intraday chart. If you notice when you zoom in, it doesn't change the timeframe whatsoever. It just zooms in on a certain part. But say we're seeing these early warning signs of an uptrend with the price action breaking above the male line and thus we're considering taking a position.

Now in reality, just wasn't actually a sign of an uptrend because after I shot, this video crone actually popped and we talked about that in the Facebook Circle group. Hypothetically say we were seeing early signs of an uptrend with the price action breaking above the SMA line and building momentum on the MACD and thus we're considering taking a position. Now, while this is the chart that we need to focus on since we're trading a day trade, we should be focusing on an intraday chart. What we should also do is get the bigger picture in mind to see if there's any longer-term price action that either increases or decreases or odds of success because trading is all about leveraging your odds of success against your odds of failure.

So we blow up the price action and see that this this increase is actually part of a broader trend upwards. We know that not only is the stock trending up overall, but that these upward signs are part of this broader trend up, which could serve as a sort of validation that it is indeed a continued climb. Now, this quicker upward climb towards the intraday makes me worried that this is a bubble because of the fact that bubbles tend to rise the fastest right before they pop. And like I said in this specific situation, Krone actually was a bubble and did pop.

but we'll see how far it goes down. So let's look at the longer-term chart to see if there's any precedent to this rush, because at the end of the day we like to look for previous trends to kind of serve as a sort of confirmations now, but one-year chart shows some percent of the share price gapping up and then selling off, but these support and resistance lines were much lower. So what this tells me is that if I'm going to be taking a position at 23 25, that means that I'm buying in at three or four times the valuation that the stock price was that just a month ago. So if I'm going to take this position, I need to be extremely careful of downward signs because there's so much downward potential and with a rise this large as most certainly people starting to short it, which will add downward pushing even if people continue to buy up shares so all else equal.

It makes sense to trade stocks that have more upward push than downward push. but once you've assessed your odds of success using several charts, you can then focus on the main chart because you've already planned your entry and exit point. Okay, so now you're probably thinking, but Charlie, what if the company has solid fundamentals and that's why it's being pushed up? What do you do in that situation? Fee thing is that the stock price in the short is determined not by how much the company is worth fundamentally, but rather how much people and institutions think it's worth. In the long run, the share price will converge with what the value of the company actually is, but in the short run, it's determined by the emotional reactions of the masses.

So if you see long term potential in a stock like Crone, that's totally fine. and then it would make sense to invest in it instead of trade. But as traders, we're focusing on getting in and getting out with a profit in a relatively short amount of time. If you really believe in the company, then it's fine to waver the ups and downs because in the long run you believe you will be successful.

Now that's a personal preference, and if you like investing more than trading, maybe you should ask yourself while you're trying to focus on training this stock, if you actually see really long-term potential in it, right? Most of the profitability of trading actually comes from just looking at how people emotionally react to things and then figuring out how you can profit off that emotion Because it's very easy to predict the reactions of the masses because people always react with emotion in the short run and then over time it kind of converges into like a more logical value. But in the short run we can profit off the emotions of the masses. So to sum it up, if you see long term fundamental value in a stock, it makes more sense to invest in it than to take a swing position. But you could also do both, and we've talked about that a little bit.

Okay, so let me give you one more example of using different time charts. This is a pretty basic and boring cookie cutter example. but I think it's worth mentioning because it shows a few more really practical reasons why you want to use multiple time charts. Say we are looking to take a five day short position because we think the stock is seriously overbought.

because of this massive gap up. we see downward potential all the way to 146, so it makes sense. It's sort of makes sense if you're basing your claim on this chart that the stock is likely to go down and the risk potential upwards is really only like a dollar or two up to 170 168. Now, while this analysis would be correct for this specific chart, if you open up the longer-term chart, you get a completely different picture.

So if you look up the three-year chart, you can actually take a step back and tell yourself that oh, you know what? I'm seeing may not just be an anomaly or an overreaction. In fact, this stock has upward potential all the way up to 218 from just six months ago. And oh look, there's also precedent for this sell-off in the past and last time this half the stock price rose up again. So while if you go back to the intro week, it looks like a clear short position, your odds don't look quite as good as you thought before looking at the long term chart.

Now that doesn't mean don't take a short position, but what it does mean is that you're going to need to make a mental note that there is a high likelihood that the stock continues to run up because it does have this pattern of selling off and recovering. That means you're going to have to see solid signs of a temporary downtrend and also limit your position time because you know that the odds are now more in the favor of the stock up trending. Alright folks, I Hope this video was helpful for you if you have any questions, I highly recommend joining our Zip Trader Circle Facebook group. I Usually pin a link to the top comment below as well as put it in the description, so don't forget to check that out if you're interested and you think that it would be a good resource for you.

But anyways, have a good day and I'll see you in the next video.