So, if your favorite time frame is daily, you must NOT look at the daily chart until you have examine the weekly chart and made a strategic direction. In this example,
First screen - weekly
Second screen - daily (favorite time frame)
Third screen - 25 min (optional and 25 min is what Dr. Elder uses)
Using multiple time frames increase your probabilities of success which is important as trading is always probabilistic and not deterministic in nature.
I'm a hybrid/discretionary trader and I have been trading the Hong Kong financials since late August this year. When I first decide to trade in the Hong Kong, I knew I was jumping in on a maturing rally and the easiest part of the rally is over. What I hope to catch was the last one or two legs of the rally.
My favorite time frame is the daily which means that I have to examine the weekly charts and make a strategic direction on the trade before I even look at the daily. From the time I went at it to the time till the time I was caught in the Dubai crisis, the weekly charts from most financials developed from a "wanning momentum" picture from late August to a full-blown divergence. The fortunate thing is that I've made 3 entries and exits before I was caught in my fourth.
Needless to say, the stock trading came to a screeching halt a few weeks ago as the prudent thing to do is to stand on the sideline and get a clearer picture before making another move. My last transaction was 8th of December when I took a profit on Shanghai Industrial Holdings (HK:363). But I have been in limbo ever since. As a comparison, in the month of November, I had 15 transactions. I had only one transaction this month. I have to also give about 30% of my profits back. If I had listen to the warning signals on the weekly, I shouldn't need to give a cent back.
It is better to heed the weekly's advice and stay on the sideline next time.