What time frame are you trading/investing in?

The time frame that you are using to trade or invest in has to be one of the most important decisions when it comes to putting together a system and trading plan for the markets.  I use a trading platform with a charting package which you can trade from ticks to minutes, hours, days, weeks and months, all offer a different view of what a share or index price is doing.  On some the price will be going up while on others it will be down.  Some will show a move is just beginning while others show it looks advanced and about to turn.  Regardless of whether you are a short term trader or long term buy and hold investor, knowing what your time frame is, or combination of time frames, is important to achieving success.

On forums, blogs and financial websites in general, I often comes across people arguing that x or y is cheap and undervalued, or z is overvalued and due a fall.  On fundamentals such analysis may well be correct, but often the information is totally irrelevant as there is no reference to time frame.  What time frame are they trading or investing in?  Without information relevant to time frame, if someone says they expect the FTSE to rise, or fall, it's pretty pointless.  

If you are a technical trader than you have to be trading a time frame, whether it is short term day trading, or longer term swing or position trading.  In fact it will be a combination of time frames as someone trading the 4 hour chart may well use the one hour and then 5 minute chart to time an entry, but long term buy and hold investors who base their decisions on fundamentals should also be looking at the charts.  After all, even if you think that x is a good company and on your buy list, why would you buy it if the trend on the monthly and weekly charts is clearly down?  Even if you are only using a few basic moving averages and an indicator like MACD, this will give you a reasonable amount of information as to whether the trend is turning.  Yet often, long term buy and hold investors will buy company x because it looks cheap.  They are then surprised when 3 months later it is cheaper still, when one look at the long term charts may well have told them that it is trending down and they could have got a better price had they waited, or at least buying at the higher price is better if the trend is with you.  The trend really is your friend.

The trouble is that fundamental buy and hold investors often see technical analysis as voodoo or that charting and market timing doesn't work.  I believe this to be false, what doesn't often work is our psychology towards the market and our ability to trade/invest to a plan, be patient, wait for signals, etc.  Get this right and you are on the way to winning.