The Time Frames of Trading.
Price action and Macro.
Over this series of articles, we will walk traders through the multiple-step process of building a trading strategy. The first installment in the series discussed market conditions . This is the second entry, in which we will delve deeper into selecting a time frame for the strategy.
One of the most common questions from new traders is ‘What time frame works best?’
After all, there are quite a few different time frames we can work with, aren’t there?
Created by James Stanley.
Unfortunately, there isn’t an easy or direct answer to this question – as any time frame you choose is going to leave something to be desired. That ‘something’ is the fact that all time frames are lagging; only showing us past prices… which may not be indicative of future prices.
But we can still choose time frames conducive to our goals, and build an analytical approach so that we know the optimal time to employ our strategy and enter trades based on what it is that we want to get out of the market.
And if market conditions do change, risk and money management can help prevent these reversals from completely draining the trader’s account.
Use Time Frames that Match Your Goals.
Often times, traders can get conflicting views of a currency pair by examining different time frames. While the daily might be showing an up-trend, the hourly can be showing a down-trend. But which way should we trade it?
This can provide conflicting signals and counter-productive unrest in the trader’s mind as they are attempting to line up trades. For this reasons, it’s important for the trader to plan the time frames they want to trade as they build their strategies.
In many cases, traders can benefit from using multiple time frames; in an effort to incorporate as much information as possible into their analysis.
Incorporating a longer time frame will allow the trader to see a ‘bigger picture’ of the currency pair so that they may get an idea of ‘general trends,’ or the sentiment that may exist; while the shorter time frame chart can be used for plotting the actual trade. This leads into a very popular permutation of technical analysis in which traders incorporate multiple time frames into their approach.
Multiple Time Frame Analysis.
By utilizing multiple time frames in their analysis, traders are getting multiple vantage points into the currency pair(s) that they are looking to trade.
A common way of employing multiple time frame analysis is to use a longer-term chart to analyze the trend or general sentiment in the pair, and the shorter-term chart to enter into the trade. Below are two time frames commonly used by ‘swing traders,’ with the goal of keeping the trade open for anywhere from a few hours to a few weeks.
First, the trader will analyze the general trend in the pair by looking at the Daily Chart, and noticing that price is in the process of making ‘lower-lows,’ and ‘lower-highs.’
(Created by James Stanley)
After the trader has determined the trend, and in the above chart – the trend is decidedly to the down-side (this is determined from the successive lower-lows and lower-highs), the shorter term chart can be investigated so that the trader can look for an opportunity to enter.
The ‘swing-trader’ will often use the 4-hour chart to look for entries after grading the trend based on the Daily.
(Created by James Stanley)
In this case, the trader would be looking to sell as the Daily chart exhibited a strong down-trend. After dialing in on the 4-hour chart, the trader would notice that a portion of the downtrend had been recently given back as price went up.
Traders can look at this as an opportunity to sell the strong trend seen on the Daily, at a relatively high price (as evidenced on the 4-hour chart).
Which Time Frames Work Best (with each other?)
When using multiple time frames, it’s important to remember that not every time frame will work together accordingly.
If I’m using the daily chart to read trends, but the one-minute chart to enter trades; there is a large element of disconnect between the two time frames. Each daily candle has approximately 1440 one-minute candles, so when I look at the one-minute chart – I am often only seeing what would constitute, at max, one candle on the daily chart. It would be haphazard to read trends on the daily and attempt to place trades on the one-minute chart due to this disconnect.
We suggest a ratio of 1:4 to 1:6 between the trend and the entry chart when employing multiple time frame analysis. So, if a trader is looking to enter on the hourly chart, the 4-hour chart can be used for grading the trend. If a trader wanted to enter on the 15 minute chart, the hourly chart can be used for reading sentiment. Below is a table with some common time frames for analysis.
Multiple Time Frame Analysis Intervals; prepared by James Stanley.
Building a Multiple Time Frame Strategy.
Many traders are familiar with the term ‘the trend is your friend.’ One of the more effective ways of analyzing trends is using a longer time frame than the one being used to plot trades.
Let’s say, for example – that a trader wanted to enter trades based on Slow Stochastics (as we had outlined in the article How to Trade with Slow Stochastics ); but only after confirming trends with the 200 period Simple Moving Average.
So – if price is below the 200 period Simple Moving Average, our trader only wants to look at sell opportunities; and those will be entered with Stochastic crossovers of the %K and %D lines. If price is above the 200 period Simple Moving Average – our trader only wants to buy; and those trades will be entered when the %K crosses above %D on Stochastics .
From the table above, we can see that traders wanting to enter trades on the hourly chart can properly employ multiple time frame analysis by using the 4 hour chart to analyze trends.
So, the first step for the trader is they want to identify the trends; and once again, for the trader using the hourly chart to enter trades the 4 hour chart can provide trend analysis. Our trader pulls up a 4 hour chart and notices that price is, and has been below the 200 period Simple Moving Average; so our trader would only want to be looking at sell opportunities (at least until price went above the 200 on the hourly, in which they would begin looking for long positions).
(Created by James Stanley)
After the trader gets comfortable with trend analysis on the 4 hour chart, they can go down to the hourly to begin looking for trade entries. And because the trend was down on the 4 hour chart, our trader is only looking at potential sell positions.
(Created by James Stanley)
In the chart above, you can see the numerous opportunities that our trader would have had to sell the currency pair based on stochastics. Surely, not every sell position would have worked out profitably for the trader; but that is an impossible goal, as completely avoiding losses is inconceivable. Multiple time frame analysis, however, can increase the probabilities with which one is employing their strategy as it offers the ‘bigger picture view’ from the longer-term chart so that traders can properly grade sentiment and trends.
--- Written by James B. Stanley.
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Multiple time frame forex trading

Selecting the right time frame is an important thing in Forex trading. Time frame stands for the width of the window in which a trader will perform a trade. In short, a trader should focus on making as many trades as he can that last only a few minutes. Most of the people make use of only one time frame to trade Forex, and if they get maximum profits in a single time frame, then it is fair enough. But, if you really wish to make great profits in Forex trading, then you must choose multiple time-frames.
Role of Multiple Time-Frames in Forex Trading.
The aim of using multiple time frames is to begin with the large picture and work down to more granular frequencies. The longer time frame will provide you an indication in regards to the bigger trends. While trading Forex at binaryoptionscenter. org/ , you must always trade in a direction of the trend and observe the charts from larger time frames, which help you to show the long term trend.
The selection of time frame is generally depends on trader’s personal trading experience and their personality. If trading seems complicated-like you're attempting to stay up to date, then you should move to a wider window. If you feel tired, looking for something to take benefit of, you need to opt for a faster trading strategy and narrower window. Each person has their own trading style. However, if you're an expert or professional trader with a good background of using the same trading approach, you might take into consideration trading foreign exchange through multiple time frames. It actually is feasible or even quite easy to be able to adjust, and follow a new trading method.
When it comes to medium time frame; this will permits you to view some even more detail of the more comprehensive trend. This moment structure is your main trading chart so you will look for confirmation from technical indicators before going into a trade. You will also follow this once you have placed your trade in order to seek suitable exit points. Traders who like to go for a long term trading can look at 4 hour, everyday and weekly charts. Those for short-term trading could possibly look at 15 minutes, 1 hour or 4 hour charts. It's always essential to learn and also know long term style prior to popping into short time period charts.
By using several time frames traders gain more insight with regards to the currency rate moving within the trend. Using the multiple time frames together with other indicators will offer a trader with information to be effective in deciding on entry factors with greater probability of prospering.
Trading Warning : Trading accounts offered by the brokers play a vital role in your winning and losing in the Forex trading. So, if you are a newbie in this trading, then you must go for mini or micro accounts and then move to standard accounts. As mini and micro accounts require minimum deposit requirement as compared to the standard trading accounts.

Trading Multiple Time Frames In Forex.
Multiple. Time. Frame. Analysis.
Multi-time frame ana… WHAT?! Chill out young padawan, it ain’t as complicated as it sounds!
You’re almost done with high school – now’s not the time to get senioritis, although you probably got that way back in Grade 12. Ha!
Multiple time frame analysis is simply the process of looking at the same pair and the same price, but on different time frames .
This means that different forex traders can have their different opinions on how a pair is trading and both can be completely correct.
John may see that EUR/USD is on a downtrend on the 4-hour chart.
However, Jane trades on the 5-minute chart and sees that the pair just ranging up and down. And they could both be correct!
What are you supposed to do?
A. Stick with one time frame, take the signal and completely ignore the other time frame?
B. Flip a coin to decide whether you should buy or sell?
Both options are terrible.
First, we’ll try to help you determine which time frame you should focus on.
Each forex trader should trade a specific time frame that fits his or her own personality (more on this later).
Secondly, we’ll also teach you how to look at different time frames of the same currency pair to help you make better, more educated trading decisions.
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Trading Multiple Time Frames In FX.
Most technical traders in the foreign exchange market, whether they are novices or seasoned pros, have come across the concept of multiple time frame analysis in their market educations. However, this well-founded means of reading charts and developing strategies is often the first level of analysis to be forgotten when a trader pursues an edge over the market.
What Is Multiple Time-Frame Analysis?
Typically, using three different periods gives a broad enough reading on the market - using fewer than this can result in a considerable loss of data, while using more typically provides redundant analysis. When choosing the three time frequencies, a simple strategy can be to follow a "rule of four." This means that a medium-term period should first be determined and it should represent a standard as to how long the average trade is held. From there, a shorter term time frame should be chosen and it should be at least one-fourth the intermediate period (for example, a 15-minute chart for the short-term time frame and 60-minute chart for the medium or intermediate time frame). Through the same calculation, the long-term time frame should be at least four times greater than the intermediate one (so, keeping with the previous example, the 240-minute, or four-hour, chart would round out the three time frequencies).
It is imperative to select the correct time frame when choosing the range of the three periods. Clearly, a long-term trader who holds positions for months will find little use for a 15-minute, 60-minute and 240-minute combination. At the same time, a day trader who holds positions for hours and rarely longer than a day would find little advantage in daily, weekly and monthly arrangements. This is not to say that the long-term trader would not benefit from keeping an eye on the 240-minute chart or the short-term trader from keeping a daily chart in the repertoire, but these should come at the extremes rather than anchoring the entire range.
Long-Term Time Frame.
In the currency markets , when the long-term time frame has a daily, weekly or monthly periodicity, fundamentals tend to have a significant impact on direction. Therefore, a trader should monitor the major economic trends when following the general trend on this time frame. Whether the primary economic concern is current account deficits, consumer spending, business investment or any other number of influences, these developments should be monitored to better understand the direction in price action. At the same time, such dynamics tend to change infrequently, just as the trend in price on this time frame, so they need only be checked occasionally. (For related reading, see Fundamental Analysis For Traders .)
Another consideration for a higher time frame in this range is the interest rate. Partially a reflection of an economy's health, the interest rate is a basic component in pricing exchange rates. Under most circumstances, capital will flow toward the currency with the higher rate in a pair as this equates to greater returns on investments.
Medium-Term Time Frame.
Short-Term Time Frame.
Another consideration for this period is that fundamentals once again hold a heavy influence over price action in these charts, although in a very different way than they do for the higher time frame. Fundamental trends are no longer discernible when charts are below a four-hour frequency. Instead, the short-term time frame will respond with increased volatility to those indicators dubbed market moving. The more granular this lower time frame is, the bigger the reaction to economic indicators will seem. Often, these sharp moves last for a very short time and, as such, are sometimes described as noise. However, a trader will often avoid taking poor trades on these temporary imbalances as they monitor the progression of the other time frames. (Learn more about dealing with market noise, read Trading Without Noise .)
Another clear benefit from incorporating multiple time frames into analyzing trades is the ability to identify support and resistance readings as well as strong entry and exit levels. A trade's chance of success improves when it is followed on a short-term chart because of the ability for a trader to avoid poor entry prices, ill-placed stops, and/or unreasonable targets.
In Figure 1 a monthly frequency was chosen for the long-term time frame. It is clear from this chart that EUR/USD has been in an uptrend for a number of years. More precisely, the pair has formed a rather consistent rising trendline from a swing low in late 2005. Over a few months, the spot pulled away from this trendline.
Moving down to the medium-term time frame, the general uptrend seen in the monthly chart is still identifiable. However, it is now evident that the spot price has broken a different, yet notable, rising trendline on this period and a correction back to the bigger trend may be underway. Taking this into consideration, a trade can be fleshed out. For the best chance at profit, a long position should only be considered when the price pulls back to the trendline on the long-term time frame. Another possible trade is to short the break of this medium-term trendline and set the profit target above the monthly chart's technical level.
Depending on what direction we take from the higher period charts, the lower time frame can better frame entry for a short or monitor the decline toward the major trendline. On the four-hour chart shown in Figure 3, a support level at 1.4525 has just recently fallen. Often, former support turns into new resistance (and vice versa) so a short limit entry order can be set just below this technical level and a stop can be placed above 1.4750 to ensure the trade's integrity should spot move up to test the new, short-term falling trend.
Using multiple time-frame analysis can drastically improve the odds of making a successful trade. Unfortunately, many traders ignore the usefulness of this technique once they start to find a specialized niche. As we've shown in this article, it may be time for many novice traders to revisit this method because it is a simple way to ensure that a position benefits from the direction of the underlying trend.