Position trading requires looking at the bigger picture. While day traders obsess over 5-minute charts, position traders focus on daily, weekly, and monthly timeframes to capture major market trends. Choosing the right timeframe is crucial for identifying quality setups and managing trades effectively.
Why Timeframe Selection Matters
The timeframe you choose determines everything about your trading:
- How you identify trends and entries
- How much noise you filter out
- How wide your stops need to be
- How long you hold positions
- How often you check your charts
Key principle: Higher timeframes show clearer trends with less noise, but require wider stops and more patience. Position traders accept this trade-off to capture the biggest moves.
Primary Timeframes for Position Trading
Weekly Charts (Primary Analysis)
The weekly chart is the bread and butter of position trading:
- Shows the intermediate to long-term trend clearly
- Filters out daily noise and volatility
- Each candle represents one week of trading
- 10-week and 40-week moving averages are key levels
- Perfect for identifying breakouts and major support/resistance
Weekly Chart Analysis
Analyze these elements on your weekly chart:
- Is price above or below the 40-week moving average?
- Is the 10-week MA above or below the 40-week MA?
- Are weekly candles making higher highs and higher lows?
- Is there a clear base or consolidation pattern?
Monthly Charts (Trend Confirmation)
Monthly charts show the longest-term perspective:
- Identifies multi-year trends and major market cycles
- Shows key support and resistance from years of trading
- 10-month MA (roughly 200-day) is a major trend indicator
- Best for confirming the overall trend direction
- Not for timing entries - too slow
Daily Charts (Entry Timing)
Daily charts help refine entries within weekly setups:
- More precise entry and exit timing
- Shows short-term support and resistance
- 20-day and 50-day moving averages for pullback entries
- Use after identifying setup on weekly chart
Multiple Timeframe Analysis
Position traders use multiple timeframes together:
Top-Down Approach
- Monthly chart: Confirm the long-term trend direction
- Weekly chart: Identify the setup and trade direction
- Daily chart: Fine-tune your entry and stop placement
Alignment Rule
The best position trades have alignment across timeframes:
- Monthly trend is up
- Weekly chart shows breakout or pullback setup
- Daily chart provides entry signal
Rule of thumb: Trade in the direction of the higher timeframe. If the monthly and weekly charts are bullish, only look for long entries on the daily chart.
Moving Averages by Timeframe
Common moving averages used in position trading:
Weekly Chart MAs
- 10-week EMA: Short-term trend, dynamic support in strong trends
- 20-week EMA: Intermediate trend, good for pullback entries
- 40-week SMA: Long-term trend (equivalent to 200 daily)
Monthly Chart MAs
- 10-month SMA: Major trend indicator (similar to 40-week)
- 20-month SMA: Very long-term trend
How Often to Check Charts
Position trading does not require constant monitoring:
- Weekly charts: Review once per week, typically weekends
- Daily charts: Check daily after market close if you have open positions
- Monthly charts: Review once per month for big picture context
Common Timeframe Mistakes
- Using timeframes that are too short: Getting stopped out by noise
- Ignoring the bigger picture: Fighting the primary trend
- Mixing timeframe analysis: Weekly setup, daily panic
- Over-analyzing: Looking at too many timeframes
Timeframe and Stop Loss
Higher timeframes require wider stops:
- Weekly chart stops: Often 10-20% below entry
- Based on weekly swing lows or key moving averages
- Account for normal weekly volatility
- Position size must adjust for wider stops
Track Your Position Trades
Pro Trader Dashboard helps you monitor your position trades and analyze performance across different timeframes.
Summary
Position trading timeframes focus on the bigger picture. Weekly charts are the primary analysis tool, showing clear trends without daily noise. Monthly charts confirm the long-term trend direction, while daily charts help refine entry timing. Use multiple timeframe analysis with a top-down approach: confirm the trend on monthly, find setups on weekly, and time entries on daily. Remember that higher timeframes require wider stops and smaller position sizes, but they capture the biggest, most profitable moves.
Learn more: position trading guide and trend following strategy.