Forex Multiple TimeFrames Analysis Summary is an overview of what we covered in previous lessons.
To trade with multiple time frame means to look at price movements of the same currency pair on different time frames.
The main chart time frames provided by most brokers are;
- 1 minute chart(M1)
- 5 minute(M5)
- 15 minute(M15)
- 30 minute (M30)
- 1 hour(H1)
- 4 hours(H4)
- 1 day(D1)
- Week (W1) and
- 1 month(MN).
Ok, let’s take a recap on what we previously looked at on time frame analysis.
Trading in the direction of the major trend increases on the chances of success of your trades.
As of the fact, you can only achieve this when you analyse the market at a bigger perspective.
Before taking a trade,
- First establish a trend direction of the trade using a larger time frame
- Enter a trade only when the lower time frame charts and the longer time frame are in agreement.
How do you know it is the best time frame to trade
Just take a reflection of yourself.
What’s your personalty like?
If you can answer that, then it becomes easy to know the best time frame for you to trade on.
Your personality defines your trading style and so the right time frame for you.
We looked at different traders’ personalty for instance;
Some traders prefer the smaller time frame because the don’t have the patience to wait for long.
They are also excited realizing profits in a very short time therefore prefer to trade when price is very fast.
Because of their character, they are always seated in front of their computers all day.
These trade mostly M1 – M15 time frame.
On contrary,
There are those that can’t handle the pressure of fast price changes.
However, they prefer to trade during the day and close all trades at the end of the trading day.
In this case they choose to trade on medium time frame; H1 and H4 time frame.
Another class of traders like to take things slow and so prefer to trade on higher time frames.
They normally hold large accounts because they need to set large stops for the trades.
With this nature of trading, you don’t have to sit in front of the computer all the time to watch trades.
To trade on a larger time frame, you must have patience because these trades take long to mature.
When it comes to choosing a time frame to trade on, it all depends on you. Different traders have different personalities and so they trade on different time frames.
In case you haven’t found a right time frame to trade.
First try out all and see what works better for you, the go with that.
You will need a demo account to do that.
Why you should Trade with multi time frame analysis
Looking at different time frames before opening a position helps you to choose a better setup for your trade and trade in the correct direction.
We use the bigger time frame to determine the direction of the trend.
This is because most traders believe that since the bigger time frame takes long to form, it is likely to last for a while compared to smaller time frames.
Once you have determined the trend using a bigger time frame, your setup is at a greater advantage of hitting a take profit target.
The large time frame also helps you to identify the strong support and resistance zones near your positions.
It also helps you to know if the trend is nearing an end.
The small time frame helps you to determine entry and exit points therefore can be used as confirmations before taking a trade.
Trading using multiple time frames helps you to know when to enter trade where to set your stops and targets and where to exit trade from.
Forex Multiple TimeFrames Analysis Summary ends here.
Test your knowledge about multiple time frames analysis in the Next lesson Quiz
ATTRIBUTES OF A SUCCESSFUL TRADER
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