Multiple Time Frame Analysis

It is important always to have a big picture overview of what is happening in the market. Although there are exceptions, in general most traders will tell you that if your trade setup or analysis lines up on multiple time frames, then the odds of being correct are greatly increased.

The first thing that one does is move up to check out the higher time frame chart. This will help one to determine the overall trend.

This signals to one that he/she should ONLY be looking for BUY signals. After all, the trend is your friend. She/he doesn’t want to get caught in the wrong direction and lose her/his shirts.

Now, he/she zooms back to her/his preferred time frame.

1 Hour Chart:

Minute  Chart:
if u plan to keep your stocks minutes, use minute charts to get in & out.
if u plan to keep your stocks hours, use hours charts to get in & out.
if u plan to keep your stocks days, use daily charts to get in & out.
The biggest mistake traders make is that they typically start their analysis on the lowest of their time-frames and then work their way up to the higher time-frames. The top-down approach is a much more objective way of doing your analysis because you start with a broader view and then work your way down.

Weekly / Monthly

If you mainly use the minutes or  hours time-frame to execute your trades, you don’t have to spend too much time here. Basically, you just want to get a feeling for the overall market direction and if there are any major price levels ahead. Especially long-term support and resistance or weekly or annual highs and lows should be marked on your charts.

Daily – Strategic time-frame

On the daily time-frame, you have to spend a bit more time on. Here you analyze the potential market direction for the week ahead and also determine potential trade areas. Again, draw your support and resistance lines and mark swing highs and lows – even if you don’t use them in your trading, it is worth having them on your charts because they are so commonly used.

Staying open minded

Always create long and short trade scenarios when doing your multiple time frame analysis. This will keep you open-minded and it avoids one-dimensional thinking. A trader who is only looking for short trades, will blank out all signals that point to a long trade. Or, a trader on a long trade will miss the signals that could signal a reversal.