Multiple Time-frame Analysis - Multiple Time-frame Analysis

Multiple time-frames analysis in forex equals using 2 chart time frames to trade forex currencies - a shorter chart time frame is used for trading & a longer chart time frame is used to check the trend direction.

Since it is always good to follow the trend, in Multiple Chart Time-frame Analysis, the longer chart time frame gives and provides us the direction of the longterm trend.

If the long term market trend direction supports the direction of smaller chart time frame then the probability of being profitable is greatly/significantly increased. This is because even if you make a mistake when opening your trade the long term trend eventually will save you. Also if you trade with direction of the price trend, then mostly likely you will be on the winning side, this is what this multiple chart time frame analysis is all about.

Remember there a popular saying by many Forex & stock market investors that says: "The trend is your best friend' - never go against the price trend.

There are 4 different types of traders - all these different types of traders use different charts to trade such as shown below.

Explanation examples of how each type of trader uses multiple Timeframes analysis strategy:

Scalpers

This group of traders holds on to their trade transactions only for a few minutes. The scalper never holds on to a FX trade for more than 10 minutes. With objective of making little sums of pips as profit, 5 - 20 pips.

A Scalper using 1 Min chart time frame wants to open/execute long, checks 5 Minutes chart, which resembles and looks like the one below, since 5 min show trend is heading up, the scalper then decides from this multiple time-frame analysis it is okay button to buy.

Day Traders

This group of traders holds onto their trade transactions transactions for a period of few hours but not more than a day. With the main objective to earn quite a number of pips, 30 - 100 pips.

Day trader 15 minute chart time frame wants to go long, checks 1H chart, which resembles and looks like the one below, since 1H shows the price trend is heading upward, the day trader then decides from this multiple chart time frame analysis it's okay button to buy

Swing Traders

This group of traders holds onto their trades transactions for a period of few days to a week. With the main objective to earn a large number of pips, 100 - 400 pips.

A Swing trader using H1 chart time frame wants to open/execute short, checks 4 hour chart, which resembles and looks like the illustration displayed below, since 4 hour chart shows the market trend is heading down, the swing trader then decides from this multiple time-frame chart analysis it is okay button to sell.

Position traders

These group of traders are the investors & traders that hold on to their trade transactions for weeks or months. With main objective to make a big number of pips, 300 - 1000 pips.

Position trader using the daily chart time frame wants to short, checks the weekly chart, weekly chart resembles the one below, since weekly chart shows the trend is going downwards, the position trader then decides from this multiple time-frame analysis it is okay button to sell.

How to Define a Trend - How to Define a Trend Using a Strategy

One can use a system which has 3 indicators - Moving Average Cross-over System, RSI & MACD and use simple rules for these indicator to define the trend. The rules of the system used to define a trend are:

Upwards Trend

Both MAs Moving Averages Moving Up

RSI above 50 Mark

MACD Above Center-Line

Downwards Trend

Both MAs Moving Averages Moving Down

RSI below 50 Mark

MACD Below Center-Line

For More explanation about this trade system read: How Do I Generate Signals with a System Tutorial Discussed.

Learn More Tutorials & Topics:

• Download Gold Platform MT4 Trading
• MT5 William % R Indicator
• Stock Index Trading Systems for Index Trading Beginner Traders
• No Nonsense Bollinger Band Buy and Sell Signals Indicator
• Continuation Patterns: Ascending Triangle and Descending Triangles Examples
• How to Add Trading Keltner Bands Indicator in Chart