ThinkorSwim Indicator: Multi-Time Frame Stochastics

Here's a code for a multi time frame stochastic.  This will allow you to plot a stochastic for any time frame that is greater than the one that your chart is currently on.  For example, it can be helpful to know what the hourly stochastic looks like if you're trading on a 5 min chart.  I'm playing around with using this a filter for mean reverting systems..such as ignore a "Buy Signal" if the stochastic on a higher time frame is over 60.  Here's an example of using the 15min stochastic with a 1 minute chart:

Here's the code.  To use this code, copy and paste it into TOS and then delete the // marks at the top and bottom.  These marks are necessary for posting the code on blogger and the indicator will not work in TOS if you don't delete them. 

Hope everyone had a great Thanksgiving!

TLT

//

declare lower;

input aggregationPeriod = AggregationPeriod.DAY;
input KPeriod = 10;
input DPeriod = 10;
input slowing_period = 3;

plot FullK = Average((close(period = aggregationPeriod) - Lowest(low(period = aggregationperiod), KPeriod)) / (Highest(high(period = aggregationperiod), KPeriod) - Lowest(low(period = aggregationperiod), KPeriod)) * 100, slowing_period);
plot FullD = Average(Average((close(period = aggregationPeriod) - Lowest(low(period = aggregationperiod), KPeriod)) / (Highest(high(period = aggregationperiod), KPeriod) - Lowest(low(period = aggregationperiod), KPeriod)) * 100, slowing_period), DPeriod);

//

My Trading Screens

I was asked recently about what I keep on my computer screens while trading and I thought that this would make a good post. These are the 3 screens that I keep up while day trading...I don't think this much is required all at once while trading in longer time frames (in fact, some day traders keep less than this on their screens while trading and would hate this much clutter). This is what works for me. It may change in the future, but I've kept this general setup for a little while now and have only changed minor things like changing my Up Volume v. Down Volume chart from lightspeed to thinkorswim, etc. (see below).

Screen Number 1: The Broker Software
As you can see above, this is my broker screen. This is all information that is provided by Light Speed Trading (my day trading broker). It is fully customizable and this is what I happen to be using right now. Some key points are the watchlists, the level 2 quotes in the lower left hand corner (which is where I also enter orders with hot keys), a 5 and 15 minute chart of whatever stock that I have pulled up in the level 2 box and a ticker alert in the top right hand corner (which wasn't working yesterday for some reason) that shows new highs and lows for stocks that I have entered into an alert list.

Screen Number 2: Trading ScreenThis screen is my actual trading screen. I use it to monitor the stocks that I'm trading or looking to trade. These charts are through thinkorswim's program...a very snazzy platform, especially for a retail program. I used to have eSignal, but the firm I trade with quit paying for it so I figured I'd try thinkorswim for a bit. So far its working pretty well. On the picture above, I have numbered my different chart windows and given a brief description or name for each chart. The most important thing about this screen is that charts 1-5 are linked, meaning that when a symbol is entered in one, it gets pulled up in all of the charts. I have these 5 charts setup to show me the multiple time frames that I use for trading.

A couple of other important things in this screen are the TICK chart, the VIX chart and the NYSE Advancers v. Decliners and the NYSE Advancing Volume v. Declining Volume. Then I've got two windows that I keep 15 minute charts of either ETFs (spy, qqqq, xlf, etc.) or sometimes I'll also keep a chart of a stock that I'm constantly watching (either to trade or to help manage my current trade). One last thing that I want to point out is that the 5 and 1 minute charts are small, the smallest on the screen. That's because I only use the 1 minute for exiting a piece of a trade and the five minute for pulling the trigger once there's a setup on the higher time frames. You can go crazy watching 5 and 1 minute charts for entries.

Screen Number 3: Futures and Forex Screen I keep this screen up at all times while trading. On it I have 15 minute charts of the ES futures contract (S&P emini), the NQ (Nasdaq 100) and the YM (the mini dow jones). I monitor these three markets to give me confirmation on break outs and just to keep an eye on the overall market. I also have down in the bottom left corner, a 15 minute chart of gold (YG). This is used the most when I'm trading a gold stock. Next to it is a 15 minute chart of the Eur/Usd pair as it's always good to know what this currency pair is doing. And finally, I keep the 30 year bond contract up in the bottom right hand. This isn't always up though, sometimes I'll put up oil or natural gas if I'm trading a stock that is involved with one of those commodities.

There you have it. Three screens that give me a lot of information with a quick glance.

Hope everyone is having a great week trading so far.

TLT

Live Trade and A Quick Look At Multi Time Frame Trend Alignment

I've got an open long position in the Eur/Usd this morning. I got a buy signal about an hour and a half ago and I quickly thought that this trade would be a loser because the pair fell and consolidated right after I bought. Now the trade seems to be coming to life as it is moving to newer highs...sometimes you have to have patience and let the trade develop. Here's a five minute chart that shows my entry along with a couple of notes about the setup:As you can see, it's the same basic setup that I've been using lately. Trender line is green, the Fisher MA crosses the Zero line and the RSI is trending but not in extreme territory. I've really been working on keeping my entries and exits as simple as possible.

The above system generates a lot of good signals and also quite a few false signals. One thing that helps eliminate some of the false signals is to look at a higher time frame (like a 1 hour chart if I'm trading off the 5 minute) and only take signals that are aligned with the trend on the higher time frame. Here are the correlated time frames I tend to use when trading currencies:

• Trading with 1 minute chart--align with the 15 minute chart
• Trading with 5 minute chart--align with the hourly chart
• Trading with 1 hour chart--align with the daily chart
• Trading with Daily chart--align with the weekly chart

These aren't hard and fast rules, they're just combinations that seem to work well for me. You can match them up in whichever way makes the most since to you. I know that other traders, like Brian Shannon at Alpha Trends, like to use 3 different timeframes. An example of his approach would be using the daily to determine the primary trend, the hourly to determine the secondary trend and then when both of those are aligned using the 10 minute chart to place the trade.

The point I'm trying to make is that by using trend alignment in multiple time frames, you can reduce the number of false signals and only take trades that have a higer chance of being profitable. There are many mediocre systems out there that could be much better if they incorporated some of the above techniques. Just some food for thought.

I'll post an update when the trade is closed out.

TLT