Timeframes Are Doing My Head In..!

Beginner Questions
1

Another total noob question.
I am really confused!!

I am following a strategy by setting up simple support and resistance lines and watching the candles in the H4 timeframe.

I watch for indecision changes in the candles,etc.

Here is what is freaking me out.

Example:
In the H4 mode a candle may look to be a bull but when I switch to M15 it would have 2 bear candles. Now, I understand why that is but what is freaking me out is not being able to make a decision to take a trade because one timeframe says one thing and another timeframe says something else!

How can a person using H4 and above make a trade on a bull or bear candle when in a smaller timeframe the candles are up and down every minute?

Should I pick one timeframe and stick with it without checking any other timeframes?
Is that the way to go?
Or is there something that I am not getting yet?

2

How can a person using H4 and above make a trade on a bull or bear candle when in a smaller timeframe the candles are up and down every minute?

Sharpturn - Time frames are nothing more than just a way to put the price movement in to a “frame” (this is why they are called time-[B]frames[/B]). For price itself - there is no such thing like a “time-frame”. Price movement happens regardless the way you are analyzing it: using h4 or m1 or h2 or h1.5.
Time-frame is just a creation of a trading software creator, a countdown system so traders could understand each other.

I’m not saying that Time-frames is a bad or good thing. What I’m trying to say - BEFORE opening any position - trader should have exact understanding of what is going on at ANY time-frame and at any time. You have to develop a skill to see the market as a WHOLE.

In practical trading: I suggest to use a Synthesis of All Time-frames. Create your own PRICE-BASED reference points (or borrow them from somebody :21:). Based on these price-based reference points - analyze each Time-frame separately and combine the results.

My suggestion might sound difficult - but if it would be easy to make money from Forex - everybody would be millionaires already - right?

3

Thank you for taking the time to explain this.
Yes…it does sound difficult and unfortunately I still don’t understand…I am not as bright as some of the guys here…

Maybe I am over analyzing this timeframe thing.
I mean, if I use the H4 or more timeframe only…well…nothing happens for a long time on the chart. How is it possible to gauge what the next candle is going to be?

Switch to a lower timeframe and there is continuous movement in the chart! Seems easier to figure out a upcoming bull or bear candle, etc.

4

Hello sharpturn,

Welcome to forex trading, and welcome to this forum.

Regarding time frames, and their use —

Most traders who have progressed beyond the newbie stage make EACH trading decision based on 3 or more time frames. And the generally-accepted way of doing this is to analyze those time frames in order, from higher to lower. You will often hear this referred to as “drilling down”.

Trend traders, counter-trend traders, and range traders all typically use a multi-time-frame analysis protocol. Let’s talk about trend traders — traders who analyze their charts to find price trends, and then trade in the direction of those trends.

In multi-time-frame analysis, the idea is to determine whether a trend — that is, a direction or bias — exists on the highest time frame, and if so which direction that trend is pointing (up, down or flat); then to look for confirmation of that trend on the intermediate time frame; and finally, if confirmation is found, to look for an appropriately timed entry into the market on the lowest time frame.

There are many ways to identify a trend. There are many ways to define confirmation of that trend. And there are many ways that well-timed entries can be signaled. Put all that together, and you have virtually countless different ways that a trend trader might go about finding a promising-looking trade, and planning his entry.

There is a thread here on the Babypips site which will teach you, in a very short time, how to use a very easy and very effective trend-trading approach which incorporates a 3-chart analysis protocol. The thread is called 301 Moved Permanently and I encourage you to study that thread. In a short time, you will master the concept of time frames, and the concept of multi-time-frame chart analysis. And you will learn a trading system which MIGHT just be the only system you’ll ever need in your career as a trader.

The 3 Ducks thread has been active continuously since it was started 7 years ago. That’s remarkable longevity for any thread on a forex forum, and it speaks to the fact that the 3 Ducks system is not only easy to learn, and profitable — but, it is also durable. That is, it automatically adapts to changing market conditions.

“Captain Currency” (real name Andy Perry) is the trader who developed the 3 Ducks system, started the thread, and continues to teach his system here on the forum. He has written an ebook detailing his system, and he offers the ebook for free to readers of his thread. You should download a copy, as soon as you can, and study it carefully. You’ll find the instructions for requesting it in THIS POST.

After you have learned the 3 Ducks system, you will have a better understanding of time frames and multi-time-frame trading than half the traders out there.

5

Thanks for that detailed answer. I am going to go check out the thread you mentioned because the 3 Duck system sounds like a trading style that my suit me.

6

Hey man,

The reality of it is that looking at the time frames below H4 will always give you False Signals and indecision because of how erratic they are.

H4 and Daily Charts are much more stable as you can see already. Even if a 15 M chart is saying one thing, it can be totally unrelated to what will actually take place in the market - which is dictated by the larger time frames. Once you are able to identify the right Candlestick Signals on these larger time frames and understand how these time frames work together, you will be much better off.

Take this recent trade on the GBP CAD for example. The target was set for a specific target on the Daily Chart.


(FXCM Demo used for Signals)

Using the 4 Hour Chart for entry, this was the result…


(FXCM Demo used for Signals)


(Live Account Trades done with Dukascopy)

You can imagine the conflicting signals that would have been seen on the lower time frames during those two periods of pullbacks on the 4 H Chart. Once the signals on these Charts are clear and are in sync with the rules of the strategy, we stick to it regardless.

Another factor is that you should NEVER watch the charts after you have made a trade decision. Even when you stick to the larger time frames, there will be temporary pullbacks that can place doubt in your mind. As long as you only check your trade AFTER it is closed (a major rule that I and my fellow traders obey), you reduce your indecision significantly.

Naturally I cannot publicly disclose how to get this strategy without breaking the rules of this forum…however, there is one aspect of time frame analysis that I can share which is important to understand.

For every time frame that gives a signal that actually leads to a profitable move, there is a corresponding lower time frame that obeys it with a time lag. This time lag is equal to the higher time frame. So a signal on the Daily Chart would be reflected on the 4 H Chart after 1 Day…etc. During this lag time, the lower time frame can move in the opposite direction and appear to be conflicting. However, once the signal on that larger time frame is correct, the lower time frame will eventually obey.


Check out my other trades in this thread and you will see more examples of these trades that avoid the volatility of the lower time frames.
http://forums.babypips.com/show-me-money-swing-trading/66923-price-action-daily-4h-charts-no-more-indicators-news-smaller-time-frames.html.

You can then trade the strategy for yourself on a Demo Account, see the results, and then apply to a Live Account when ready.

Duane aka DRFXTRADING

7

Sorry DRFXTRADING - but in my opinion what you said here is a COMPLETE NONSENSE !

A profitable Trading System will work on ANY Time-Frame.

Ignoring small Time-Frames and what is happening there - is the same as sticking your head in to the sand and think that it will help solve the problems. It would be the same as ignoring the fact that 1 kilometer distance contains 1000 meters. (1 meter would be a smaller TF in this example :wink: )

Trader should learn to see the market as a “whole”. Time-frames are just different dimensions to analyze ONE market

8

There are traders that can’t trade without looking at multiple time frames and traders that will tell you that looking at multiple time frames is insane and others that using time based charts is just a big waste of time.

The problem here is that you are very new to this so before you even start you should learn about every type of chart and not just time based. There are range bar, renko, point and figure, momentum bar, and tick charts.

Then what type of trader you want to become? Long, swing or day trader? If you are a day trader and if you are using a time based chart then become good using the 5 minute chart, that seems to be a much used chart by day traders, using multiple time frames can be helpful but tricky. You can go to the 30 minute chart and see the uptrend there and then come down to the 5 minute and look for long opportunities only but then again you might be restricting potential profits by not considering against the trend trades. A dip on a 30 minute chart might be 5 or 6 candles but on a 5 minute chart might be 30 or more bars and within this dip there might be one good opportunity to make money going against the higher time frame trend.

So everything in trading is kind of foggy and nothing is clear as we’d like it to be, there are no perfect setups or systems and your biggest enemy, at least for me, will be hesitation. A good book to read is “Trading in the zone” by Mark Douglas, it won’t teach you how to trade but it will help you on the psychological aspect.

9

MF_Shark…thanks for the compliment…

I always notice that people who attack others/give ´advice´ never have anything to show to prove it. They always seem to hide behind “should” “will” “can”, “would”…without any recent/credible evidence.

What “can” happen is one thing, but what “actually” happens is another. Take a look around this forum. The majority of traders are struggling AND the majority of them use smaller time frames. Coincidence? Correlation? more like Cause and Effect.

True, perhaps I shouldnt have said “always” - “majority of times” is a better description of the failure rate of these signals on the lower time frames.

If instead of trying the same approach over and over on these time frames, they looked at the higher time frames and tried something different, VERY LIKELY to have much better results. Unfortunately, like for me, it will only take several margin calls before they make that decision.

10

ok DRFXTRADING, I will rephrase my words specially for you

It would be the same as ignoring the fact that 1 kilometer distance contains 1000 meters. (1 meter would be a smaller TF in this example )

[B]It IS[/B] the same as ignoring the fact that 1 kilometer distance contains 1000 meters.
1H Timeframe - means: 1hr contains 1 bar.
1 hr means - 60 minutes or 2 bars by m30, or 4 bars by m15, or 12 bars by m5… or 60 bars by m1 - ignoring this fact - is the same as sticking your head in to the sand and pretending that nothing is happening around you.

Trader should learn to see the market as a “whole”. Time-frames are just different dimensions to analyze

[B]Trader HAS [/B]to learn to see the market as a “whole” - in order to become a profitable trader.

Better now ? :slight_smile:

Sorry - didn’t see any recent/credible evidence from you - can you please redirect me?

Btw… sorry if you feel being attacked. Just - trying to express my opinion, that “there are no Holy grail’s”. There are “no special Timeframes”, no “special pills” or “programs like in Matrix movie, that make you trader overnight” - all there is - understanding of the market, each step of it, on any TimeFrame at any time - any professional trader will tell you the same.

And if you are a professional trader - and you are still trying to “sell couple of Timeframes” to innocent newbies - means you are just another “holy grail” seller

11

…not a Holy Grail seller…I have something that works plain and simple…is that so hard to believe?

Not saying its the only way to make money on the Forex…but if it solves most of the problems preventing people from making money…then its worth talking about, defending and circulating.

12

Honestly - no disrespect to you DRFXTRADING :
You don’t need to convince me in anything :slight_smile:

I’m experienced enough trader to know that plain and simple things that work exist. But these plain and simple things - are plain and simple only for you! Because you have created them based on your own understanding of market, based on your own experience, and failures.

For all other newbies - this is a “holy grail” that looks very nice and beautifully packed. And saying to them, that you need only two timeframes to be profitable - is same as deliberately pushing them off the cliff

13

Not wishing to knock you or your systems, but the way you keep promoting it on what seems to be every second thread here doesn’t reflect well on you. You may want to hold back a bit and concentrate on your own thread, think how you would feel if someone tried hijacking it to promote their system.

14

Thanks for the input guys.

So what i gather from what I have read so far is YES use all the timeframes and NO don’t use all the timeframes.

I guess I had better figure out what best suits me.

What I seem to be doing at the moment is jumping through a bunch of timeframes when I think there may be a chance to enter a trade. It does get very confusing!

15

Sharpturn - in my opinion what you should gather from what you have read here.

Step 1. Forget about “fast money” on Forex. <- if you can humble yourself with it, than proceed to step 2

Step 2. Learn to understand the market as a “one whole”. Learn until you reach condition, when you turn on any timeframe at any time and have exact understanding what is going on there. ONLY THEN go to step 3.

Step 3. Choose 1-2-3 Timeframes (as DRFXTRADING did) that suits you best - and start looking for trading signals and opportunities to open trading positions.

Any attempts to do it somehow “faster/easier” - will result in loss of money (in the long run)
You should be in following mode by default: “Don’t understand what is going on? = DO NOT open any positions”

16

I don’t have the link handy (& my phone signal is too poor to find it) but try Googling something like, “DailyFX article timeframes”. I read a good article on there regarding timeframes.

My summary of it for you would be figure out what timeframe you want to trade & then use the one above it for checking the market bias & the one below it for entry.

It mentions a ratio of 1:4 or 1:6 between timeframes with the latter to cover the gap from 4hr-to-Daily. So if you’re trading off the 4hr chart, use the daily for bias & the hourly for entry. If your trading the 1hr charts, use the 4hr for bias & 15mins for entry. Obviously this isn’t set in stone but it’s a starting point.

It also points out that there’s too much disconnect between say, the Daily charts & the 5mjns charts, so there’s not much point looking at both of these. Some may disagree, I’m just summarising someone else’s views that I thought were pretty good.

More data goes in to the formation of each candle as you go up the timeframes so they are statistically more significant in terms of signals etc which is why it’s advisable to stick to the higher TF’s to start of with.

17

Exactly my point…

Interesting, on the one hand, me telling someone to only stick to 2 time frames is pushing them over a cliff…yet in Step 3…you advise him to do as I did?!! lol…sometimes when you want to dominate and have the final word you dont realize you are saying the samething…

And I see you are telling him not try to rush things either…thats what I am saying as well- thats the inherent danger of Smaller Time Frames…which you were defending, they force you to rush into things, with losing consequences…

eddiep…Im not hijacking…if someone´s thread is about asking for help with an issue and I believe my way of trading will address that issue, I am simply trying help that person, not hijack…If they were talking about ganja smoking and I come in here to talk about track and field with no clear connection, then yes I would be hijacking…

Point I am trying to make is that- in my opinon supported by evidence-the confusion sharpturn is having can be solved by stick to the higher time frames.

18

DRFXTRADING - please do not mispresent my words.
What you are saying is [B]exactly the opposite[/B] what I’m trying to say.
You just “ignored” first 2 steps that I mentioned - and went straight to 3rd step <- This is exactly what I’m telling NOT to do - otherwise you will loose all your money. You will become just a “Holy grail” hunter by going straight to 3rd step.

You can not go to 3rd step straight away - FIRST you have to gain the understanding of market.

After your last post DRFXTRADING - I finally came to concsution:

  • Either you are just pretending that you don’t understand what I mean - or you are just a newbie yourself who is trying to sell a “holy grail”

If Sharpturn wants to get rid of that confusion that he has - he has to stop looking for a “fast way”, or for some “mystical secret time-frames” (or HolyGrail sellers like you) .
And start developing skill - [B]where questions [/B]like:

  • “what time-frame to use”
  • “what phase is the market in” at the moment (trend or flat)

[B]will disappear automatically[/B]

19

Here’s the article that I was talking about:

20

Hi there,

I am not looking for a “fast way” at all. In fact my plan is to gradually work my way up the ladder over many years…starting with a tiny $500 account.

I just asked the question about time-frames because I genuinely thought that maybe more experienced traders here on the forum would know a way to read them that is more suited to newbies.

After reading all this conflicting information I guess the only way is to practice all time-frames.

Thanks guys.
I am still trying my best…