Many traders prefer to make their final trading decisions based on a single platform. They are concerned about spending their energies in thoroughly analyzing the basic techniques within the trading time frame. They are not concerned about how the trading will appear in the bigger picture time frame.
Sometimes this smaller approach can display great results. But in most cases, a bigger approach needs to be followed to entail some great results. And this is where we suggest the traders with “Multiple Time frame Analysis”. With this analysis, the trader can easily handle the forthcoming potential viabilities within a trading setup. We will explain all the basic concepts and advantages of Multiple Time Frame Analysis in Forex through this guide.
Introduction
Discussing Multiple Time Frame Analysis, it’s an analytical concept that is generally used in trading and is quite a powerful system if it is utilized properly. A trader should observe various time scales on a similar instrument analyzed to identify the current market behaviour and its trends within those time frames. This will enable the trader to figure out what is happening between those certain time frequencies.
With the help of Multiple Time Frame Analysis, a trader can increase their overall probability of trading. It even reduces the emerging risk exposure. You will find this trading concept to be used as a liquid financial instrument on different trading platforms such as stocks, futures or Forex.
What are the advantages of multiple time frames?
- It will allow the trader to have a micro view of a few larger time frames to confirm the overall trader’s original trade analysis. You can even take it as the backup pattern or even fine-tuning your entry into the trading market.
- Through the combination of time frames, a trader can manage the risk more effectively. Hence, a trader does know when they have to move or stop at some smaller time frames.
- Using multiple time frames through the larger to the smaller one will enable the trader to determine the opposing patterns which can form different smaller time frames.
How you can do multiple time frame analyses?
Well, multiple time frame analysis is generally based on three time frames which are:
- Long-term
- Medium-term
- Short-term
You can utilize the long-term time frame for determining the upcoming trends and determine some resistance zones. A trader will identify some broader trends within the smaller moves and figure out the resistance zones in the medium-term time frame.
Last, we have a short-term time frame in which the trades are finally executed based on previously identified levels and the market conditions.
Bottom line
No doubt, the multiple time frame analysis starts working in a time which you probably take for eating your morning breakfast. Once you start trading, your whole chart will move upward and downward. All you should remember is that you will meet some big fish while swimming in the ocean as well. Although the whole concept sounds simple, the process of making money is harder. Perform some back-testing before you plan to incorporate the multiple time frames into your trading strategy. Experiment with different methods one by one.
