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Question about Chart Indicators on Different Timeframes

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Question about indicators such as MAs and VWAP on charts of different time frames. The context here is using these as points of entry / exit while monitoring (specifically) 5-min and 1-min charts.

 

The numeric values of identical indicators differ on each timeframe slightly, which I'm finding confusing when timing trade entries. Is this difference something others try to mitigate through settings? Is it standard and just a matter of knowing they differ? Is the method really to focus on resistance / support applied to one timeframe (i.e. 5-min) and focusing on this?

 

Thanks for your insights.

 

Wesley

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Wesley -- the moving averages are calculated values for the specific chart you are looking at. So, the 9 period exponential moving average on the 5min chart will be a different calculated value than the 9 period exponential moving average on the 1 min chart, and so forth. It is calculating the moving average for the last 9 periods (whether 1min, 5min, etc). As for which to rely on (1min or 5min) as a better indicator of support/resistance, I don't have an answer for you (that's up to the trader and their strategies).

 

The exception to the the above is with VWAP -- this is a calculation of all shares traded for the entire day regardless of timeframe, so that technical level should appear as the same value on all charts, regardless of timeframe.

 

Hope it helps and that I didn't confuse you more. Also I'm no expert on any of this (yet!) so hopefully the information is correct!

 

Anders

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No, that helps. I understand the calculations behind the indicators (though the clarification on VWAP is helpful, too).

 

My question (which you addressed) is really about risk management -- guidance from Andrew and others emphasizes use of levels, hence the initial question. Understood that the timeframe in use is trader-specific -- totally makes sense.

 

I'm curious to know how others feel regarding use of MAs as levels for entry / exit guidance as it pertains (if at all) to timeframe when making these decisions.

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Wanted to circle back on this regarding the comment about VWAP. This isn't the same on charts of different timeframes within the same time period.

 

Assume two timeframes, 5-min and 1-min. Also assume the same number of shares traded each minute of the a single 5-min timespan.

 

If price descends $.20 each minute, starting at $2 and ending at $1, the VWAP on the 5-min chart will be the mean of this change, while the VWAP on any given 1-min candlestick will be above the mean, or at the mean, or below the mean. Hence, when comparing between the two in real time, VWAP values are different.

 

None of this contradicts the underlying feedback that levels / indicators used by a trader are an individual choice, but since I haven't been doing this long enough to have personal preference, it's worth clarifying -- for me, at least.

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The VWAP is the average price of all the shares traded since a specific starting time, not the average of the shares traded during the time duration of a candle. The way DAS calculates VWAP by default is from the market open time. So the figure shown on the 1 minute and 5 minute chart is essentially the same number.

 

Like all averages it depends when you start counting, so you may see different VWAPs on other platforms, but DAS is pretty consistent across charts.

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