Well Stuart, nice question
The first point is that of timeframes. I don't really see different timeframes as hugely important. What I mean by that is that it's a bit like the zoom function on your camera. When you zoom in and out, it might change what
you see, but it doesn't change what is actually there. Price follows the same path no matter what timeframe you select on your chart.
So it depends on your own outlook and how you want to trade. Say for instance you are going to be in front of you screen for the day and you'd like to take a shot at getting a really tight entry. Nothing to stop you zooming right into a five minute chart and using that for entries with super tight stops. But you would need to remember that you will probably have to have the patience to maybe take a few goes before you got a position in play.
Alternatively you could be only checking your screen a few times a day for a minute or two. If that's the case, you might want to use a higher timeframe and allow yourself winder stops. You will suffer less losers, but your stops will be that bit bigger. It's all swings and roundabouts. Sometimes people get really hung up on different timeframes and treat them almost as if they are different instruments. They're not, it's just a different way of presenting the same data set on your screen.
If you open google maps on your phone when you are trying to plot a route to go somewhere, you start zoomed far out with a wide overall view of where you're going. Then you zoom in, a bit further and narrow it down, then in a little further, until eventually you are right in tight following yourself as that little blue dot moving along the streets. Looking at the next left or right turn. How far you zoom in on the map will not change where you are going. It's just a matter of you presenting it in a way that is comfortable for you to view it and interpret the information.
As for waiting for a candle to close, yes, I have read all that before. I might sound like a broken record here, but again, it's a matter of personal preference. Let's look at some example pros and cons:
advantages of waiting for a candle to close -
- better confirmation that the trendline is broken;
- probably fewer losing trades
- only have to check charts periodically (at the end of the particular timeframe concerned)
disadvantage of waiting for a candle to close -
- price could move significantly before the candle closes, increasing the risk that we are getting in at a poor price
- this will probably require bigger stops
- increased probability of having to carry a loser through a retrace
These are only examples off the top of my head, everyone will be different.
I can tell you my own preference, but they may or may not work for you. I personally prefer to get in right on the break, i.e. not waiting for a candle to close. I am interested in that "pop" I'm always talking about which I hope you have seen from previous examples of me doing live trading. Sometimes, not all the time, but sometimes, when a trendline breaks you get a pop, an acceleration in price as the bulls give up and the bears jump in (or the other way round). That burst of price, on the occasions that it happens, allows me to get my stop to breakeven very very quickly. So my risk is small both in terms of the number of pips, and in terms of time, because I can get that risk off the table quickly.
What's the tradeoff? Well, I miss quite a few trades, I have to take quite a few more losing trades that I would like, I am often frustrated when price is being stubborn and not behaving the way I want it to, and so on. It suits me, but it might not suit everyone.
The other way you could manage things if you find that you don't like trading the breaks is to focus on the retests. Again, you will have to stomach the fact that you will miss good trades, but when the retests do occur, you can get in on them with very tight stops and they can make for spectacular trades.
It's all a matter of finding your own groove - that fits in your with your risk tolerance, your emotions, your timezone, your daily routine, all that. You never get your groove by copying someone else, you can only get it by doing it yourself, doing more of what works for you and less of what doesn't.
Hope that answer helps, and it isn't too long and boring!
