I remember having written before on the importance of using multiple time frames for trading, even if one is a short term trader. I completed a trade today which I think illustrates this principle rather well, so I thought I would share it with you readers. BKRS showed up in my intraday scan on Friday as it was a stock which was up on high relative volume. I got in based on the 1 min chart which is shown below. I had posted about this stock even on twitter before getting in.
As you can see above, it was consolidating rather well after a decent move up. On the daily chart, I saw that 9.07 was a significant resistance level. Watching the bid and ask on the tape, I got in at 9.07 anticipating a breakout. The stock did manage to break the resistance level and closed at 9.24.
As shown in the chart below, the stock did gap up this morning, and I got out at 9.45.
Why did I sell a stock that was acting rather strong? No, I wasn't trying to catch the top. The answer lies in the weekly chart which is shown below (as of Friday). Before getting in the stock, I had noticed that the stock had got rejected at or near the MA(200) at least twice in the recent past. So, that was my price target.
So, I got in seeing the daily chart, based my entry based on the 1 min chart and sold based on the weekly chart. All this for a stock that I held only for one day. I think the above example illustrates pretty well the importance of using multiple time frames while trading. I admit that I didn't use to follow this method of looking at various time levels earlier and it is something I have picked up only this year. In the beginning, I had to force myself to look at various time frames but now it has pretty much become a habit.
Not that it matter, but the stock got rejected at the MA(200) again today and is currently trading at 9.09.
Take care and good luck!