I believe that I understand why you start with the higher time frames to guesstimate how a particular pair will go. You drop down to the lower time frames for confluence. But why in the world do people say that they are placing their trades on the lower time frame chart? Why not place that same trade on the higher time frame chart and just ride the wave? Especially since everything is in alignment from the higher chart to the lower chart?
They frame the trade on the higher time frame and they trade the higher time frame too. The lower time frames are used to gain better precision on entries.
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Pretty much nail on the head , Quadpip. Also if a scalper it is good to have a sense of direction prior to looking at the chart
Oh, so for example, I’m looking at a 4H chart and I spot a channel. For the sake of this example, the price is going up, so I can bounce down to the 1H chart and place an entry and exit trade based on what I saw on the 4H?
But if this is the case, why can’t I just do it on the 4H especially if my results will end up the same?
Thanks a bunch!
u can, u ll just need a larger stoploss. plus if u trade from 4hr upwards u should be in that trade atleast few days. some of us just don t like to wait that much for a trade to develop. me for example i do the hole top down aproach, weekly daily levels, fibs, channels, then go down to 1hr and wait for the price to show weakness or strenght in that battlezone i ve marked from the topdown. if i see that then i ll go to a 5m or 15 chart and take my entry there( same area like on a 4hr). i like to make it a free risk trade as soon as possible(assuming my analisys is corect and price goes my way), put something in the bank and move to breakeven. then i can swing that trade for how much it wants to go but no risk and helps me mentally a great deal( no stress, pressure). u could do same thing on 1 hr or 4hr, i guess it all depends to how much risk ur willing to take or the amount of drawdown( not a fan of big drawdown in the hope price will go my way).
merry christmas
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The higher time frames provide a bigger overview of the market, smaller frames are used for refined entry timing within the context of the bigger picture
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