Trading Multiple Time Frames

How to trade multiple time frames in ForexThough the longer framer provide better and more accurate trading opportunities and also applies best the various technical analysis techniques and tools, there are still more trading opportunities on shorter frames, though on these frames the chances are not much solid, they still provide more trading spots than the shorter ones.

To trade shorter frames, you have to take long frames in consideration. The reason to look into larger frames is to have better understanding of the market bias.

In order to trade this way, follow the following steps:

1: Choose the frame you want to trade on, depending on what kind of trader you are and how much time and money you are willing to invest. Trading shorter frames requires less time and money, while trading longer frames can take hours or even days of regular observance.

2: After choosing the time frame you want to trade on, go to a bigger frame to locate the trend, seeing if it is an uptrend, a downtrend or a range bound market.

When you choose a bigger frame, keep it mind to use 1:4 to 1:6 ratio. For example, you want to trade on one minute chart, you have to locate the trend on a 5 minute chart.

Check this table of charts and how to recognize the trend bias on them. To trade on one of the charts on the left, you have to locate the trend on the right side of the table.

 You want to trade in…

You have to look for the trend in…

 1 Minute Chart

5 Minutes Chart

5 Minutes Chart

30 Minutes Chart

15 Minutes Chart

Hourly Chart

Hourly Chart

4 Hours Chart

4 Hours Chart

Daily Chart

Daily Chart

Weekly Chart

Weekly Chart

Monthly Chart

3: If the market on the proper longer frame is an uptrend, then we should be looking only for buying opportunities on our short-frame chart.

If the market on the proper longer frame is a downtrend, we should be looking only for selling opportunities on our short-frame chart.

  • A “long” chart is often mentioned here meaning a chart of a long time frame. So is a “short” chart here means a chart of a short time frame.
  • The longer chart is, the more reliable it is and the more accurate information it provides. The reason is the number of trades each candle represents.
  • Longer frame charts offer the solid trading opportunities, while shorter frame charts offer more trading opportunities. You can say:
    Long Charts = Quality
    Short Charts = Quantity
  • You can draw Fibonacci or trends on a long frame, and still use it on a shorter frame.
  • Whenever you are looking for the trend bias, whether it is bearish or bullish, it is advised that you look at the last 100 candles or so. So if you are looking at a daily chart, you should look at the last 6 months data or so.
  • ALWAYS trade in the direction of the trend, not against it.
  • Choose the most obvious trading opportunity, whenever you have a not-very-sure trading enviroment, always change the currency pair you are trading, there are dozens of currency pairs in the Forex market to choose from.

Leave a Reply

Fill in your details below or click an icon to log in: Logo

You are commenting using your account. Log Out /  Change )

Google+ photo

You are commenting using your Google+ account. Log Out /  Change )

Twitter picture

You are commenting using your Twitter account. Log Out /  Change )

Facebook photo

You are commenting using your Facebook account. Log Out /  Change )

Connecting to %s

%d bloggers like this: