Hello everyone
Everyone knows ‘the trend is your friend’ quote, but I have a question that I would like to discuss here.
On my daily timeframe or 4H, I always check which trend is going on, up, down or sideways. So once I know which trend is occurring, I know whether to go long or short, depending on the trend. But when I am on my lower timeframe (1H or 30min.) I often see the opportunity to go long and take a big profit while the trend is going down.
Should I take the trade or not?
I use Ichimoku, MACD and Parabolic SAR to intraday trend, using the Daily for trend, 4hr for confirmation, and if they line up with the 1 hr chart, enter on that time scale.
But that’s just one constrictive approach. I suggest you experiment with your suggestion on a demo account. See if it works for you.
Mixing up timeframes will often cause some cognitive dissonance.
You really need to decide what time frame you are trading and stick to it.
Personally I’d go as far to say that multiple timeframe analysis is a waste of time and causes problems .
Master one type of trading which includes timeframe before mixing them up.
Yes! Exactly what I was thinking… But I see al these pro traders talk about ‘top down analysis’…
I “Liked” the post John but I love how you used “cognitive dissonance”. The language of The Bard lives on. Happy New Year.
I think you may be mixing concepts here. The idea of top down analysis is very much how you described your own approach: determine trend of Daily, confirm of 4H and time the entry (in the same direction) from the 1H.
When you see opportunities in the opposite direction on the lower TF, you are only identifying pull-backs on the main trend, not different trends. Trading these are ok if (and only if) you are fully aware of this and the fact that the price can extremely quickly bounce back into the overriding main trend direction.
There is only one price whatever TF you are looking at and therefore the 1-hour chart is only a “magnifying glass” disclosing and expanding the detail of price gyrations embedded within a higher TF candle - a kind of microcosm within the macrocosm.
But, as has been said, it is far better to stick to one approach/TF rather than doing different things on different time frames.
Thank you for your answer! Really helpful!
One single timeframe . You will lose all your money if you keep watching more than one time frame, the trend is the trend in the chart you are watching
The point of multiple timeframe analysis is to help you pick entry and exit points on the lower timeframe to trade on the larger timeframe. Like that’s legit the only reason for looking at a lower timeframe; to pick entry and exit points. Whether you’re following the trend or trading the retracement (both on the larger timeframe), it remains the same; the lower timeframe helps you pick entry and exit points
💁
THIS is the answer (AVSH) you are looking for! I can’t quite believe some of the answers above!!
In respect to the discussion above, stick to what works for you. As a matter of fact, you can as well practice your assertion on demo account to know whether multiple TF works for you. The higher the TF, the better. Analyse from the monthly and streamline it to your preferred TF to have a better look at the movement of price action.
Goodluck
I agree - and particularly if you are day trading for consistent small gains of about 20 - 30 pips by using the 50, 100 and 150 EMAs on your entry chart, say 15M, 30M or 1Hr. Trawling through different charts bound to create confusion and frustrations if you don’t have patience.
I should also add it helps to keep the stop loss tight close to 50ema level on the chart.
It is way better to use multiple timeframe than to be stack on the lower timeframe to avoid fake outs…
And is it possible to trade with let’s say a €500 account on a slightly bigger timeframe like the 1H for entries and exits?
Cus I often see people saying that when you’re trading with a small amount of capital, you should avoid the bigger timeframes…
Multi-time frame analysis can be the best way to view the price swings as they cycle from lower to higher TFs, creating a retracement to use for trend continuation trades. (And when on rather larger TF or with high volatility, the retracements can also be traded, enabling capturing pips as the price swings in both directions.)
Top down analysis is the best way to determine the largest TF that is currently “in control” of the trend direction. You can get a taste of it at the TDA with IMT thread at ForexFactory.
And no, it is not something complicated and time consuming–it takes 5-15 minutes to do one pair on the weekend to get your expectations for which TF will have the “action” for the next day.
You can swing, day trade or scalp with the account, it all depends on your risk appetite…just get the experience.
Actually, the 1-hour TF is not a bigger TF at all. Many even consider it too small to use due to intraday price “noise”.
When people talk of the problems of using a small account balance on longer term timeframes they are usually referring to Daily/Weekly/Monthly TFs. And the reason is that one usually needs to apply much wider stops in order to give the trade room to beathe on these timeframes. I.e. whereas a 15min TF user may place stops around 25-50 pips, a Daily chart users may place stops 150-500 pips away, depending on the volatility of the instrument.
The question of whether a $500 account can be used on longer term timeframes depends on your position size and your leverage used. Your position will incur the same initial margin regardless of the TF used and its size will depend on your leverage: the higher the leverage the smaller the initial margin. But your account will also need to cover the size of any loss while the position is open if it is negative. If you have large stops then you need to check that your account is big enough to cover the loss if the price heads towards your stop, or triggers it.
You can adjust your overall margin requirements by varying the size of the trade you wish to take according to the size of the stoploss pips.
Remember that you should not be risking more than 1-5% of your equity on any single trade in order to preserve your trading possibilities in the event of a stop out. And this may feel restrictive when considering your trade size/stoploss. It may be worthwhile keeping to a 4-hour chart for your trades, perhaps with a daily chart to help with picking out the overall predominant longer term trend.
Do you consider 1hr timeframe as a lower timeframe?
I could well be wrong here, but I see multiple time frames as providing a more comprehensive picture of how the market is reacting to whatever it is reacting to. I use it as a confirmation that I’m either on the same, or different page to the general market sentiment.
Without a doubt, the Daily chart is regarded by pro traders as the most profitable, the best trend signal etc. however, I look to the 4hr chart (it could be 8hr) to confirm I’m on the same page, and as I’m trading intraday, I’ll use a 1hr chart that is in synch with the higher time frames to place my trade.
Why 1hr? Well, having experimented at length with others, I’ll completely avoid lower time frames as being for young at heart speculating, and higher time frames as too slow for my patience.
I like to get in and out of the market in a day, not having to worry about holding an overnight position for the vagaries of Trump starting WW3, or the UK being submerged by Covid variants, or Europe being dissolved into separate states.
Each to there own, as they say - and as I can demonstrate steady profitability, I’m comfortable with my system.