I’m trying to diversify the timeframes I trade and encountered a conundrum.
The problem: I’m trading both the 4H and daily timeframe. I went short, based on a bearish signal on the daily timeframe. It might take 3-5 days for the trade to play out. But then I saw a bullish signal on the 4H timeframe, and according to my backtest, taking these signals is generally profitable.
What would you do?
I’m inclined to stick with the signal on the higher timeframe, since it’s going to be “stronger”, with more trading volume behind it.
Suppose we make it a rule not to trade AGAINST the higher timeframe. However, if we only trade WITH the higher timeframe, then aren’t we simply piling into positions that we’ve already opened? If so, why not simply stick to the higher timeframe and ignore the lower timeframe altogether?
I’m assuming considering the amount of time you’ve been here & the variety of information you’ve been exposed to, you have by now developed a reasonably robust approach?
If so, & it’s providing you with a positive expectancy, why would you need to diversify timeframes?
Why not look to replicate or transfer your primary approach down onto a faster timeframe from the one you’re currently utilizing, where undoubtedly you’ll attract or receive potentially more betting opportunities – if that is indeed your objective?!
But you haven’t stated the objective, so I’m merely guessing on that score.
As you’re already discovering, unless the separate frameworks/structures are extremely well defined with clear objectives, you’re setting yourself up for a frustrating & emotionally fraught roller coaster ride.
Yeah, I’m actually testing and transferring my methods from higher timeframes to lower ones for more betting opportunities, as you’ve pointed out. I didn’t quite picture actually abandoning one timeframe for the other, though.
I was hoping to trade all timeframes to maximise trading opportunities. However, if there’s too much overlap between the timeframes, you’re either “hedging” or just trading one mega position.
If you’re seeking diversification & your approach is indeed robust & effective, why not simply operate it across different asset classes.
Whenever you can plug in & play a simple, versatile set up into a variety of asset classes & experience similar results then you know you’ve got yourself an efficient & solid approach.
If the set up on your higher timeframe can be replicated & cascaded down through any number of lower timeframe combinations, then use the higher timeframe as your prompt or directional filter.
So, whenever your higher timeframe indicates you should be prepping for a long entry, then only place long bets into your platform whenever you receive the same set up/entry trigger on one of the smaller timeframes.
That way you’re flowing in harmony with your primary or leading timeframe.