Trading the Emini requires careful planning and strategy. In this topic, we will discuss setting up your time frame for the Emini. Many traders day trade the Emini and normally open a position in the day and close their position at the end of the day. Many traders trade many different time frames and some traders do not trade time frame at all, rather they trade tick charts. One of the most popular time frames traded by many Emini traders is the 5 minute chart.
The 5 minute chart shows price in that given 5 minute time period. It does not matter if 10,000 contracts or 100,000 contracts are traded in that 5 minute; it will only show one candle stick or one bar. The candle stick can be a short candle stick or a long candle stick. The long candle stick generally means more contract are traded in that 5 minute period and a short candle stick shows less contract traded in that 5 minute period.
Many traders like to trade the 5 minute chart, however there are traders that like to trade the 10 minute chart and some traders like to trade the hourly chart. In a 10 minute chart, it will only show one candle stick or bar for every 10 minute. The 10 minute candle stick is equivalent to two 5 minute candle stick and bar. If one 5 minute candle stick is bullish and another 5 minute candle stick following is bullish, then the 10 minute candle stick will be bullish. However, if one 5 minute candle stick is bearish while another 5 minute candle stick is bullish, it will show a Doji if price close at the same open and close level.
Trading the 5 minute chart is popular; however some traders prefer to trade the tick chart. A tick chart shows the amount of trades given in one tick. For example, if a trader set up his tick chart to 120, then for every 120 trades that enters the market will show one tick. There are traders that like to set their charts at 1,200, which means for every 1,200 trades that enters the market, it will show one tick. The 1,200 tick chart is more reliable than the 120 tick chart. The 120 chart can generate more false signal.
Time frame is very important in Emini trading. The market is very volatile and very quick. In a volatile market scalper like to trade the 5 minute chart as scalpers are looking to make quick profit. In a low volatile market, some traders like to use the 10 minute and 30 minute chart, as it gives them more a direction of the market. Traders that trade chart pattern often trade the 1 minute chart because it is easier to draw trend line. Some traders will trade the 1 minute break out and some traders like to trade the bounce off support in a 1 minute trend line. A 1 minute time frame is very fast compared to the 5 minute chart. Whatever time frame you decide to use in trading, it is always best to pick the time frame that is best suited for your trading style.