This is a Reason why do You need to see bigger Time Frame

Trading Discussion
1

Price in the forex Market or any other Investment instrument contains a few things,

  1. Definitely the price it self.

  2. Time.

  3. Volatility.

  4. Noise (Uncertainty).

    Volatility is added up or decreased over time, for a period when a price momentum is set and direction of trend is sure, Price goes smoothly to one direction only and this is what we called a Trending Market.
    After every trending Market, it will usually stop for a while and perhaps will continue to follow previous trend, only if the momentum is still there. Or perhaps a Reversal ?? who knows ?
    . But Why do it stop ? Taking a rest ? yeah, Maybe … :21:

    At the end of trend, Traders usually taking up their profit and if more and more profit trader get out from the trade and collect the profit they have earned, the momentum is reduced, as example : On a Bearish Market (Bearish Trend) at the end of this trend the candle stick will slowly reduced in size, there are quite apparent that the candle stick body will become more and more smaller and the Lower candle stick tail become more and more longer.
    At The end of Trend where momentum becomes lesser, the market will go into what we called a Consolidation Period, in this period the price seems to be bouncing between a same high and low for some times.

here is an Example of a GBP/USD Consolidation period using Time Frame 30M, this period is actually quite easy to spot because candle stick have same size, Same high and low.

Consolidation Price TF30.jpg700×202 22 KB

So the next step is to wait for the price to breakthrough this price range and if the price manage to break the rectangle, we might have a BREAKOUT !! and put your order in the direction of the Breakout… hmm, sounds Easy.

OK, so this consolidation pattern is easy to spot right ? Yes… If you choose a bigger Time Frame, Below is a picture same as above only the projection is using Smaller Time Frame TF:15M and TF: 1M

Consolidation Price TF15.jpg700×259 22.6 KB

Consolidation Price TF1.jpg700×154 21.9 KB

See The Difference ? smaller time Frame contains more noise, more uncertainty and definitely its harder to see the big picture. I was Trading using smaller TimeFrame before and changing to bigger Time Frame, and now very comfortable with 30Minutes Time Frame, why ? I think every trader has their own choices, so not every trader using the same Time Frame, its personal matter I think. For me 1M to 15M contains to much noise, above 1H is too long (I’m a Day Trader). so TF: 30M makes a comfortable Period for me.

Regardles what TF you choose, just remember that Bigger Time Frame contains bigger Picture but smaller time frame contains movement

2

I think it ultimately boils down to your trading style and strategy. You can’t apply the same strategy on different time frames. I do get your point, but I don’t think you can generalize it. You may have a strategy which works great for you, but it will fail for another trader.

3

Different strategy does have different time Frame requirement, but bigger Trend is always shows in the bigger time Frame, What I want to say is, whatever your strategy is and whatever Time Frame you use. You need to check for the bigger Time Frame to see what is already happening.

Example : there was big bearish movement in the 1H and 4H time Frame, but in the smaller time frame the price looks like going for reversal, Stoch is UP, MA is UP and etc… So, by checking with the bigger Time Frame it would make you think twice before enter Long in the smaller Time Frame. Well perhaps you’re right and the price is going for reversal … but who knows right ? Will it be saver if I’m going with the bigger Time Frame ? Like, waiting for the short setup by assuming the Up movement is only for a moment.
Market is Unpredictable and checking with bigger Time Frame can do No harm, I Suppose :smiley: