Timeframes: zoom in, zoom out
Reading Charts

Timeframes: zoom in, zoom out

7 cards and 4 quick questions. About 2 min.

The lesson in full

  1. The same market can look like it's rising, falling or going nowhere, depending only on how far you zoom out. That zoom level is the timeframe.

  2. A timeframe is how much time one candle covers. On a daily chart each candle is one trading day; on a monthly chart, one month.

  3. Daily chart: lots of small zigzags. Great detail, but much of it is noise: random wiggles that mean little.

  4. Weekly chart: each candle is one week. Many zigzags melt away and the direction gets clearer.

  5. Monthly chart: the big picture. Moves you see here can last for years.

  6. Common mistake

    Mistake: deciding on a 5-minute chart while ignoring the bigger trend. On real price history, trend clues held up better on monthly charts than on daily ones.

  7. Key takeaway

    Zoom out first, then zoom in. The bigger timeframe sets the direction; the smaller one is detail.

Quick check

  1. On a weekly chart, one candle shows... One week of tradingEach candle covers exactly one unit of the chart's timeframe.
  2. Which timeframe usually shows the most noise? DailyShorter candles catch every small wiggle, so random moves stand out more.
  3. Before deciding on a daily chart, it helps to... Check a longer timeframe firstThe weekly or monthly chart shows which way the big tide is flowing.
  4. The daily chart shows a drop, but the monthly chart is in a strong uptrend. So far, the drop is... A dip inside a bigger uptrendSmall pullbacks are normal inside big trends. One daily drop doesn't change the monthly picture.

Words in this lesson

Reading Charts

  1. What is a candle, really?
  2. Line, bar and candle charts
  3. Trends: the walk of price
  4. Floors and ceilings
  5. Breakouts and fakeouts
  6. Timeframes: zoom in, zoom out
  7. Three candle patterns worth knowing
  8. Moving averages
  9. Momentum and the RSI
  10. Volume: how many voted
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