Best Timeframe to Trade Commodity Trading
Multiple time frames analysis equals using 2 chart time-frames to trade Commodity Trading - a shorter one used for trading & a longer one to check Commodity Trading trend.
Since it's always good to follow the 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 commodity trend will eventually save you. Also if you trade with the direction of commodities trading 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 Commodity Trading & stock market traders that says: 'The commodity trend is your friend' - never go against the commodities trading market.
There are four different types of Commodity traders - all these use different charts to trade as described below.
Examples of how each type of Commodities trader uses multiple Commodities Trading time-frames analysis strategy:
Best Time Frame to Trade Commodities Trading
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 amount of pips profit: 5 - 20 pips.
A Scalper using 1 min trading chart wants to long, checks 5 min chart, which look like the one below, since 5 min show commodity trend is going up, then decides from this analysis it's ok to buy.
Best Time Frame to Trade Commodities Trading
Best Timeframe to Trade Commodity Trading
This group holds on to their trades for a few hours but not more than a day. With the objective of making quite a number of pips: 30 - 100 pips.
Day trader trading 15 min trading chart wants to go long, checks 1 Hour chart, that looks like the one below, since 1 hour shows market commodity trend is going up, then decides from this analysis it's ok to buy
Best Timeframe to Trade Commodity Trading
Best Timeframe to Trade Commodity Trading
This group holds on to their trades for a few days to a week. With the objective of making a large number of pips: 100 - 400 pips.
Swing trader using the 1 Hour trading chart wants to short, checks the 4 Hour chart, which looks like the commodities trading example illustrated and shown below, since 4 hour shows the commodity trend is going down, then decides from this analysis it's ok to sell.
Best Timeframe to Trade Commodity Trading
Best Timeframe to Trade Commodity Trading
These are the traders that hold on to their trades for weeks or months. With the objective of making a large number of pips: 300 - 1000 pips.
Position trader using the daily trading chart wants to short sell, checks weekly chart, weekly looks like the one below, since weekly shows the commodity trend is going down, then decides from this analysis it's ok to sell.
Best Timeframe to Trade Commodity Trading
How to Define A Commodities Trading Trend
Using a commodity system has 3 indicators - Moving Average Crossover System, RSI and MACD & uses simple rules to define the trend. The rules are:
Upward trend
Both MAs Moving Up
RSI above 50
MACD Above Centerline
Downwards Commodity Trading Trend
Both MAs Moving Down
RSI below 50
MACD Below Centerline
For More explanation about this system read: How to Generate Trading Signals With a Commodity Trading System.
