Ask Colin

I would like to know what charts - daily, weekly, or monthly - do you make your decisions to enter/exit trades? It seems to me that at times these 3 charts (on the same stock) can indicated 3 different trends - up, down and sideways.

You are right about the way you can see trends in different time frames on bar charts with different periods.

Because I am looking for substantial trading ranges, I tend to base the stock selection decisions on weekly charts. I like to have a trading range at least a year in the making and preferably more. These trading ranges will therefore look substantial on a weekly chart.

However, it could be done with a daily chart just as well - so long as enough data is on the screen to see the big picture. For that reason I usually start with a monthly chart to see the long term trend and then look at the weekly chart to see the entry. Since my entry is on a break of resistance, it would not matter whether I did this from a daily or weekly chart, because the weekly highs will also be daily highs in the trading range.

As for exits, it actually does not matter whether I use a daily or a weekly chart, because my exit signals are based on a break of a support level. The weekly lows again will also be daily lows. However, the difficulty is to see which trend I am trading.

I think it can be done from either a weekly chart or a daily chart. The weekly should be the key one, but a daily is OK, so long as I focus on the size of the swings between the peaks and troughs. If the swings are only a few days, then that is a short term trend.

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