Hello everyone. My name is John Paul. DayTradeToWin.com.
Today is video lesson 3 in this series. In this third session, I’m going to talk about
why the 5-min time frame is the best for day trading. I’m also going to discuss what the
term “front running” means. First, let’s talk about why the 5-min time frame is the best
if you’re a day trader. Regardless of the platform you’re using (NinjaTrader, MultiCharts,
TradeStation, thinkorswim, Sierra, eSignal, etc.), you will see there are defaulted time
frames listed. Most traders are using a 60-min, 30-min, 15-min, etc. I would say a 2-min is
not that popular. In using a 5-min time frame, you can catch any move based on what everyone
else is looking at. For instance, if there’s a move that occurs after a news event, it
usually happens within a 10-min or 15-min interval. These times are divisible by 5.
If you’re a 60-min trader, you have to wait until a full hour has plotted on a candle/chart
in order to make a decision to go long or short. If the move already happened, I am
able to catch it using a 5-min time frame. It’s the best time frame to use. Now, on to
front running. Front running is a term, that back in the 80s and 90s had a bad connotation.
It occurs when you place a trade to enter or exit into the market ahead of everyone
else. Back then, traders with inside information would exit a trade or stock just before it
collapsed. This was a big no-no. Many traders and brokers got into trouble for insider information.
If you fast forward to 2014, the days of the boiler rooms don’t really exist like they
used to. However, you can still have some manipulation based on front running. The type
of front running I will show you is a little bit different. We’re not using any type of
insider information. Instead, we have a specific entry or target. For example, if you wanted
to enter short here, say at 1776, see how this candle broke down and you had a stop
or stop with limit waiting to get short at 1776, the term front running would imply an
order at 1776.25. What you’re doing is jumping ahead of everyone else to get into the trade.
This can occur when you’re entering the market and with a target. If you know a specific
target you want to achieve, say 1774. I use the ATR to tell me that. I’ll go into detail
later. I’m going to front run my target one tick in front of that, so it happens to be
1774.25. If everyone is waiting for 1774 and you have a limit order. We’re going to place
an order 1 tick in front at 1774.25, so when it does reach it, the likelihood of getting
filled is better instead of waiting where everyone else is at 1774. You loose a tick,
yes, but that’s fine in the bigger scheme of things. It’s better to get in, get out,
and wipe your hands clean. My name is John Paul. Stay tuned for the next video trading
lesson coming up in the next few days. If you have any questions, please reach out to
me at [email protected] Until next time, good trading.