Consider these various time frames, and what they mean to your investing or trading approach:
Minute-to-minute: Constant flow of prices, rumors, and chatter about stocks
Hourly: Similar to minute flow, only with opening and closing behavior (“strong open in XYZ” or “I hate the way the ABC closed”)
Daily: Very noisy. Filled with random gains and losses, driven mostly by the overall market (my guess 35%) or the equity’s sector (~30%).
Weekly: Begins to smooth out the noise factor. Informative charts, overall trend beginning to develop. Still contains lots of noisy economic chatter.
Monthly: Provides a window into secular cycles. Most traders ignore the monthly charts — too slow they say — but these can give you some insight into real (versus false) reversals.
Quarterly: Valuation data comes into focus via earnings. Longer term view allows potential mean reversion to be taken advantage of (via re-balancing).
Annual: For retirement planning, and life events. Yearly data puts the rest of the noise into perspective. Most of the daily or even weekly up and down movements get smoothed out. Ultimately, where long term investors should be focused.
Decades: The market historian’s friend.
What’s your time frame like?
No comments:
Post a Comment