As I am learning through varsity, information given about the lookback period is below
Look back period is simply the number of candles you wish to view before taking a trading decision. For instance, a lookback period of 3 months means you are looking at today’s candle in the backdrop of at least the recent 3 months data. By doing this, you will develop a perspective on today’s price action concerning last 3 months price action.
For swing trading opportunities, what is the ideal look back period? From my experience, I would suggest that a swing trader should look for at least 6 months to 1-year data. Likewise, a scalper is better off looking at the last 5 days data.
So as per the above definition, do I need to use a minimum of 6 months lookback period in order to understand the previous trend while I am trading according to EOD charts.
The lookback period you’re mentioning should be for backtesting, maybe include a bull market year, bear market year and a recovery period year, so it’ll be 3 years. To determine current trend, you should learn dow theory and candlestick patterns. Some other theories are there too, but basically focus on how reversals take place, that’s the beginning of your trend and focus on rules that violate the trend while on-going so meaning a consolidation.
*or it could be an outright reversal too.
There is no hard and fast rule. Sooner or later you have to improvise (When you spend time with charts).
Swing traders typically look at all the dates that charts have.
The multi-time-frame analysis is an evolved form of Look-back period. Here A swing Trader analyses monthly, weekly, daily, hourly and what not, and to get an idea of important levels, precise entry and exits, Proper stops and targets
For Scalper, It is diffrent game. It can take one week of data to look at and analyze