Multi Timeframe Trading
In the forex arena everyone need an edge to make it, you have to ask your self as a trader that what is it that works to my advantage. Some they choose to maximize on the strategy , some they maximize on the psychology and others on technical analysis. This article will explore what is believed to be the most critical component of forex chart analysis “multi timeframe trading” .After reading and understanding this concept you can develop an edge and become profitable in the market.
Multi Timeframe Trading
Multiple time frame trading, or multi-time frame analysis, is the process of viewing the same trading instrument under different time frames. Usually the larger time frame is used to establish a longer-term trend, while a shorter time frame is used to spot ideal entries into the market.
Main reasons for using this technique is:
- To get sniper entries
- For trailing and account management
Using the technique
Start by checking the larger timeframes
Monthly time frame
Top down approach is the best when you are doing your analysis, first check the monthly and weekly and daily timeframes, this will help you in your conclusions concerning the general trend. The monthly time frame gives a better picture of what is happening this is good though it might hide trading setups that are forming in the weekly and daily timeframes. when you are in a large timeframe lookout for, if the price is heading near a support or resistance level, look out for Fibonacci levels and its relation to support and resistance levels. Is the price heading towards a major trendline.
Weekly Timeframe Setups
Drawdown to the weekly setups are likely to form or that are forming, this is the very moment to do your analysis, identify the trendlines and channels and make use of retracement levels. Identify and select setups that are likely to happen within a day or two. Monitor the trade setup because sometimes price can travel fast sometimes and retraces you wouldn’t want to miss the exact trading moments.
Lastly Smaller Time frames
This is what we consider as the entry points, lets say according to your analysis finally the price has entered into the zone you were waiting for, be it a support zone or resistance or even trendlines that you have drawn in larger timeframes then its time to proceed and focus on the hourly and 15 minute timeframe. If you are anticipating a buy then its time to look for bullish reversal candlesticks if its a sell you are looking forward to then its the precise moment to look for bearish candlestick reversal once you spot the pattern then execute a trade and patiently wait.