Multiple Time-Frame Analysis

Multiple timeframes analysis equals using 2 chart timeframes to trade cfd - a shorter one used for trading and a longer one to check CFD trend.

Since it is always good to follow the market trend, in Multiple Time Frame Analysis, the longer timeframe gives us the direction of the long-term trend.

If the long-term market direction supports the direction of the smaller chart timeframe then the probability of being profitable is greatly increased. This is because even if you make a mistake the long-term cfd trend will eventually save you. Also if you trade with direction of the market, then mostly you will be on the winning side, this is what this analysis is all about.

Remember there is a popular saying by many CFD Trading & stock market investors that says: 'The cfd trend is your friend' - never go against the cfd market.

There are four different types of CFD traders - all these use different charts to trade as explained below.

Examples of how each type of CFD trader uses multiple CFD Trading time frames analysis strategies:

Scalpers

This group holds on to their trades for only a few minutes. Scalper never holds on to a trade for more than ten minutes. With the objective of making small amounts of pips as profit, 5 - 20 pips.

A Scalper using 1 minutes chart wants to go long, checks 5 min chart, which looks like the one below, since 5 min show cfd trend is going up, then decides from this analysis it is ok to buy.

Day Traders

This group holds on to their trades for a few hours but not more than a day. With the aim to make quite a number of pips, 30 - 100 pips.

Day trader trading 15 minute chart wants to go long, checks 1 hour chart, which looks like the one below, since 1 hour shows market cfd trend is going up, then decides from this analysis it is ok to buy

Swing Traders

This group holds on to their trades for a few days to a week. With the aim to make a large number of pips, 100 - 400 pips.

Swing trader using 1 hour chart wants to go short, checks 4 hour chart, which looks like the cfd example explained and illustrated below, since 4 hour shows the cfd trend is going down, then decides from this analysis it is ok to sell.

Position traders

These are the traders that hold on to their trades for weeks or months. With the aim to make a large number of pips, 300 - 1000 pips.

Position trader using the daily chart wants to short sell, checks weekly chart, weekly looks like the one below, since weekly shows the cfd trend is going down, then decides from this analysis it is ok to sell.

How to Define A CFDs Trading Trend

Using a cfd system has 3 indicators - Moving Average Crossover System, RSI and MACD and uses simple rules to define the trend. The rules are:

Upward trend

Both MAs Moving Up

RSI above 50

MACD Above Centerline

Downward CFD Trading Trend

Both MAs Moving Down

RSI below 50

MACD Below Centerline

For More explanation about this system read: How to Generate Signals With a CFD System.