Hi Mark,
As I've written in the other thread about candlesticks, the essential elements for TA (technical analysis) are:
1) Candlesticks
2) Simple moving averages
3) Multiple time frames (daily, weekly, monthly, quarterly...)
With these 3 elements only you can already do good technical analysis for market timing. Remove one of these things and something fundamental will be missing.
So now the request is about multiple time frames. Sorry in advance, this will be a long post. But I prefer to take the time to explain things properly. Most things will probably be known and obvious to you, and maybe I could make a terse suggestion like "Please implement multiple time frames in FM" and it could be sufficient. But using multiple time frames for years and being a fundamental component that I cannot do without, it seemed important to me to explain and justify the features that should be IMO implemented, if you decide to go that way.
What is multiple time frames?
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It is the ability to change the duration of what a candlestick represents or, when a closing price line is displayed instead of candlesticks, the duration between each close price.
For EoD (End Of Day, not intraday) TA, standard time frames are: daily, weekly, monthly, quarterly and yearly.
In a daily time frame, each step of the X-Axis represents a day. In a weekly time frame, each step of the X-Axis represents a week, and so on for monthly, quarterly and yearly.
What I call here "Time Frame" may be called differently depending on the softwares: "Frequency", "Time Unit", "Time Scale"... So I don't suggest that "Time frame" is necessarily the best wording to use into the program, but at least it is the common wording in the TA literature.
Not all programs offer quarterly and yearly time frames, because many are free programs that don't offer so much historical data depth, and quarterly and yearly time frames are generally not really used by personal investors. But in serious TA softwares we always have these time frames too, for long term analysis. I personally use the quarterly time frame and I could hardly do without. Yearly is for very long term analysis, I rarely use it but sometimes it is useful too.
If Fund Manager were to implement multiple time frames, these 5 time frames should all be available IMO, it would be a pity not to go all the way.
When we look at programs that offer TA with candlesticks, maybe 95% (if not more) offer the ability to change the time frame. There are two main reasons why multiple time frames is unavoidable for TA: Investment time horizon and Multiple time frame analysis.
Investment time horizon
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Here is a chart without scales:
https://i.ibb.co/dPHL9fv/Chart-Without-Scale.pngEven a professional technical analyst cannot tell, from this graph alone, in what time frame this graph is. In all time frames you can find graphs like this one, with those tradable patterns, trends and reversals, and even in intraday timeframes. Graphs like this one exist in 5 minutes, 15 minutes, 1 hour, 4 hours, 1 day, 1 week, 1 month... time frames. This fractality of prices and chart patterns is the beauty of technical analysis.
The first decision of a trader / investor that uses technical analysis should be to determine what is the time frame he will use to find entry and exit points. This means determining his investment horizon.
https://www.activtrades.com/en/in-depth ... ur-tradingIn a daily time frame, trends often last from a few weeks to a few months (from a technical buy signal to a technical sell signal).
In a weekly time frame, trends often last from a few months to 1-2 years.
In a monthly time frame, trends often last from 3-4 years to 10 years.
etc.
One may wonder if looking at a zoomed out daily chart is not the same as looking at a weekly or monthly chart. Of course it's not. Here is a monthly chart and its corresponding daily chart (with the same date range):
https://i.ibb.co/fYp3135/Monthly-Daily-Same-Range.pngYou can't do monthly TA in a daily chart, it doesn't work that way. Candlesticks and patterns are specific in each time frame, as well as indicators like MAs and Bollinger bands. Moreover, we see that the date range of the daily chart is far too large, we don't see each candlestick, which is required for proper TA.
Another related idea, and this is an important one to understand: when switching to another time frame, the date range must be adapted in order to maintain the correct view of the candlesticks and patterns.
For example, in a daily time frame you'll want a date range of only a few months whereas in a monthly time frame you'll want a date range of several years.
When switching to another time frame, this adjustment of the date range can be done manually by the user of course. But, as the technical analyst can very often change the time frame (see below multiple time frame analysis) it would be quickly very tedious. So in the TA programs, when switching to another time frame, it is generally the number of candlesticks displayed on screen that remains constant (the user's last choice in terms of candlestick spacing and width is retained), while it's the date range that automatically changes. I think that this behavior is a must. Screenshot:
https://i.ibb.co/tKbVsbd/Monthly-Daily- ... sticks.pngNow, what should happen when the date range is changed in a given time frame? Should then the time frame be automatically changed in order to display correctly the candlesticks and patterns? For example if the time frame is daily and the user changes the date range from 6 months to 10 years, should the time frame be automatically changed to monthly, for example?
We find several / many free online TA chart programs that work this way. On this point I don't have a definitive opinion, because it depends on the implementation approach. However, I tend to think that it is potentially a (very) annoying behavior, and once the user has explicitly selected the time frame he wants it is not to the program to change it automatically and arbitrarily after that because of a change in the date range. One thing is certain, if the user wants to display a 10Y date range in a daily time frame he must be able to do so in some way.
Multiple time frame analysis
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Prices move in long-term, mid-term and short-term trends (which can also be called cycles, waves, patterns...). When we observe a short-term trend in progress, it is therefore part of a medium-term trend and part of a long-term trend that are in progress too. A trend on a given time frame is therefore always nested in some trends in higher time frames. Thus, prices evolve in trends organized in a fractal manner, nested one inside the other.
So the evolution or life span of a trend in a given time frame is always conditioned by what is happening in the higher time frames. Multiple time frame analysis consists in analyzing not only the time frame we use but equally the higher time frames, in order to understand the context in which it takes place, to determine likely targets depending of the trends and the supports and resistances in the higher time frames, etc.
For example, if in the daily time frame the current trend is upward but in the weekly and monthly time frames the trends are downward, it is likely that the daily upward trend is just a correction in the higher trends, and that it will be of short duration. On the contrary, if the trends in the higher time frames are equally upward, the daily uptrend is more likely to continue (PS: this is a very simplified example, the exploitation of the fractality of trends cannot be summarized in a few sentences).
Now if we observe a trend in a weekly time frame we will need to look at the context in the higher time frames too, so the monthly and quarterly time frames. Etc.
The important thing to understand is that, without multiple frame analysis, you look at a trend / a pattern without knowing the context of the higher time frames, so it's almost like walking blindly, it is exceedingly complicated with a single time frame to estimate whether a trend is likely to continue or whether it will be a flash in the pan. I think we can say that all profitable investors and traders who use technical (graphical) analysis use multiple time frame analysis. You can't really do without it. And yet so many people don't realize it... Anyway.
There are two ways to practice multiple time frame analysis:
1) when only one time frame is displayed on screen at a time, we have to change frequently the displayed time frame in order to see what happens in the higher time frames.
In my opinion this way of doing that can be sufficient in the first implementations.
2) Several time frames are displayed on screen (an example of a standard layout with 4 time frames:
https://i.ibb.co/gtysCcc/Multiple-Timeframe-Setup.png)
Of course this is the most practical and efficient solution, and it is to be expected that such a feature will be requested at some point.
About indicators, often the same settings are used in the various time frames. For example, a RSI 14, a SM20 with Bollinger bands can be applied as well in all time frames, it is always relevant. So I think that applying the same indicator settings to all time frames can be sufficient in the first implementations. But here too it is to be expected that different indicator settings for different time frames will be requested at some point (personally the interest I see is especially with moving averages).
Conclusion
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With only the daily time frame, the TA module of Fund Manager is currently very limited and barely useful because, as I have explained, it only allows to trade the daily trends (and not the weekly, monthly... trends) and with no ability to do multiple time frame analysis. The implementation of multiple time frames would make it fully useful!
I am available to discuss any aspect if needed.
Thanks!
