How Multiple Time Frame Analysis Increases Your Trading Profits

The second option is to close the trade and reenter the position when the price confirms the black trend line and bounces in a bullish direction. This is totally up to you and largely depends on your trading style. Traders can adequately judge whether a market is trending, reversing, or ranging. We also see intermediate traders focusing on the primary trend and ignoring the short term trend and having many unnecessary losses because of it. The first one is to hold EBay during the correction in order to catch the next increase.

Some of our forex friends have been nice enough to give their two cents on this matter through this forum thread on multiple time frame analysis. At the end of the day, it really is all about finding what works .

How to Perform Multiple Time Frame Analysis

For our purposes here, the trend can be identified on the Daily chart. The pair has been trading above the SMA green line and pulling away from it. Price has also been building higher highs and higher lows, and, at the time of this chart the GBP is strong and USD is weak. Also, when we look at Slow Stochastics , we can see that the indicator is giving us a very bullish look in that the two moving averages which comprise Stochastics are at a strong upward angle and the separation between them is increasing meaning momentum is becoming stronger.

All this adds up to bullish upside momentum. This means that we only want to buy the pair when each time frame is reflecting that same bullish momentum. In looking at the 4 hour chart we see that the uptrend is present here as well after a mild retracement.

Stochastics reflects the pullback that took place but is still poised to crossover to the upside should bullish momentum ensue.

The one hour chart provides us with our optimum entry signal. Notice how Stochastics has retraced, moved below 20 and then crossed over to the upside and continued to move above the 20 line. That crossover in the red circle would be our entry signal since that is the point when bullish momentum kicks back in on the one hour chart.

When that bullish crossover takes place, the one hour time frame is now aligned with both the four hour and the Daily chart. They are all moving in the same direction at the same time and our Multiple Time Frame Analysis objective is accomplished. To implement Multiple Time Frame Analysis, after we establish the trend, we want to check a couple of lower time frame charts and not enter the trade until they are in agreement with the longer time frame chart that we used to establish the trend.

Once they are all in agreement, we enter the trade. It is like aligning the tumblers in a lock. Once that is accomplished, the lock will open freely. The Time Frames of Trading 59 of Discover Multiple Time Frame Analysis. DailyFX provides forex news and technical analysis on the trends that influence the global currency markets. Take a free trading course with IG Academy.

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First , you should generally avoid trading in multiple time frames at the same time. This is especially true if one of your methods is scalping. You simply cannot be successful at this kind of trading without constant attention and focus. Trading with a medium and long-term time window is a little more possible, but you should still be careful. Second , never let multiple time frames become an excuse for undisciplined trading. Try to define the market conditions in which you will use each strategy and confine yourself in what you will do.

Finally, when learning a new strategy follow the same process you used to learn forex trading at the beginning. One common problem is that an experience swing trader, for instance, might decide to learn scalping. Assuming that he is an experienced, profitable trader, he enters the market with confidence and suffers big losses. The various trading strategies can be hugely different-success in one is no guarantee for another.

In spite of the perils, there are many reasons to use multiple time frames and strategies. Get out of your comfort zone; push yourself to try something new. With practice and careful learning, you may find your profits going up further than you thought.

Learn more about forex scalping in our extensive forex scalping guide. Trading Foreign Exchange on margin carries a high level of risk and may not be suitable for all investors. The possibility exists that you could lose more than your initial deposit. The high degree of leverage can work against you as well as for you. Brought to you by: Was this article helpful?

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Multiple time frame (MTF) analysis offers traders the variety needed to implement the TOFTEM model. Before we embark on this journey, let us explain what degrees of time frames we use and what the TOFTEM stands for. Winners Edge Trading uses 5 primary degrees of time frames. Irrespective of the time frame a trader chooses, its best to maximize the number of degrees to 5. Long-Term Time Frame Equipped with the groundwork for describing multiple time frame analysis, it is now time to apply it to the forex market. With this method of studying charts, it is generally the best policy to start with the long-term time frame and work down to the more granular frequencies. Remember, a pair exists on several time frames – the daily, the hourly, the minute, heck, even the 1-minute! This means that different forex traders can have their different opinions on how a pair is .