Yesterday, I mentioned that in evaluating the potential trade in QSII, I looked at the 60-minute, daily, and 15-minute time frames to help make my buy decision. For every trade, I believe it’s important to not just look at a few charts, but 5 charts of the same stock which include:

• 1 or 2-minute candlestick chart
• 5-minute candlestick chart
• 15-minute candlestick chart
• 60-minute candlestick chart
• Daily candlestick chart

I find doing this so beneficial, I devote a single monitor for it.

When you watch multiple time frames,, you’re getting the big picture of the stock or equity you’re trading online. It’s similar to buying a car. Before you drive off, you kick the tires, check the seating, estimate the gas mileage, and make sure it’s the color you want. So why just look at a daily chart, or a daily chart and 5-minute chart? A few benefits of monitoring a larger range of times include:

• Having more opportunities for trading patterns to emerge
• Easier to establish trends (ex. the daily chart may be neutral, so that uptrend you spotted on the 5-minute chart may stall easier)
• Longer time frames can be used to set stops (less noise or volatility)
• Shorter time frames can be used to manage stops near resistance areas
• Stops and targets are easier to determine

During those whippy markets, finding a stock that’s trending can be difficult. Instead of entering on a 5-minute buy signal, and risk getting stopped out quickly, the 15-minute chart could be used. Or, let’s say you see a high probability pattern emerge and, decide to enter with a tight R. You can, by utilizing the 1-minute, or 5 minute charts. It really opens up your available trading setups.

Online stock trading is difficult enough. Using more than one or two charts to watch a singe stock adds to that discipline we all use in trading.

Some days you have an online stock setup that will work, yet you make nothing on the trade. Quality Systems Inc., QSII was that equity for me today. After putting in a lower high on the daily chart, QSII broke down today.

The stock looked like a great short in all time frames. The daily chart caught the longs off guard opening below yesterday’s low after closing near the high as in the Bear Short 1 pattern. The 60-minute chart portrayed a BS2 signal and I was filled short using a BS2 pattern on the 15-minute candlesticks. Risk, R = .34. I decided with all charts lined up a target of 2R would be set.

The stock traded down to 1R where I moved my stop to break even. Even with the Nasdaq Composite falling as much as 30 points, QSII just couldn’t do it. I’d call the trade both successful and frustrating. I followed my plan and didn’t turn a profit into a loss. Keeping losses is the key. Not every trade will give you 4R gains like this day trade.

The MZZ position was closed today for 1R. The trade in this ETF was up 2R at one point, so I switched to the 5-minute chart to manage it. It stalled at trendline resistance near 73, and just couldn’t hold. I used a pivot stop on the 5-minute chart. The pivot wouldn’t form though, when the Nasdaq bounced. I enede up just taking the point Today was one in which trade management played a key role.