Multiple Time Frame Questions

[Lawrence Chan]

Quote from neksor:

Thanks guys for the replies, Daring - would you care to share a little more if possible on how you would utilize multiple time frames.

I currently have 2 simple thoughts in mind on how they could be used:

A) Dual or Triple time frames e.g MAs of differing lengths
1) Longest time frame for trend confirmation,
2) Intermediate TF for signal generation against the longest TF
3) Shortest TF for risk management i.e (trailing stops, reversals).

B) Time frames of differing granularity
Smaller time frames respect S/R levels of larger time frames. In this case only 2 time frames are used. e.g Daily to enter trades vs Weekly charts.

Plsd to hear any other view / opinions on MTTF analysis thanks!

You are thinking of the different timeframes in serial sense.
i.e. MA of differing lengths, trend confirmation, etc.

The main reason for looking into higher timeframes is to find out what the higher timeframe players are doing because they are likely the ones with more money behind their plays.

As higher timeframes contain the "noise" of the lower timeframes to these players, you need to extract the features of the higher timeframes to make them useful.

e.g. spike high / low in higher timeframe, previous week high/low, accumulated VWAP price from previous trading day, etc.

 

[oldtime]

I don't use charts, but after I put it on, I just keep looking for a chart with a time frame that makes it look like a sensible trade

you can almost always find one where you bought at the bottom or sold at the top

 

[bone]

I am a big proponent of using multiple timeframes for technical analysis, and I have been doing so for years now.

Please be careful about making broad statements that X timeframe is superior to Y timeframe. What works best is entirely dependent upon the instruments volatility characteristics combined with the trader's comfort level in terms trade holding periods. In other words, it makes little sense for a macro level swing trader to be using one minute or tic charts.

 

[oldtime]

Quote from bone:

I am a big proponent of using multiple timeframes for technical analysis, and I have been doing so for years now.

Please be careful about making broad statements that X timeframe is superior to Y timeframe. What works best is entirely dependent upon the instruments volatility characteristics combined with the trader's comfort level in terms trade holding periods. In other words, it makes little sense for a macro level swing trader to be using one minute or tic charts.

it might, if he knows he wants to get long in the next hour or so

 

[Specterx]

Quote from neksor:

Hi there,

As a neophyte in trading, I would like to hear how some of you guys use Multiple Time Frame Analysis in your trading. So far I have in mind that it could work as a trade filter where by to enter on minute bars when px/MA crosses on daily bars etc etc.

Additionally, how would one represent a higher time frame? (i.e daily bar could be represented by a 480 minute bar for an 8 hour trading session or a daily bar)

Or should I solely focus on the trend within the time frame which I am trading on only because when I throw in a higher time frame into the system I get less trades and am afraid I adding the sum of moving parts leading to additional curve fitting.

Would like to hear from other traders in how they would use multiple time frames in their trading. Thanks.

If you are new enough to be asking the question, I strongly recommend you base your trade decisions on one timeframe only. If my experience is any indication, the sort of thing you mention in your first paragraph will likely turn out to be an unprofitable waste of time that will hold you back significantly.

The market simply doesn't like to allow traders to capture e.g. daily-chart price moves using minute-chart risk on a consistent basis. Likewise, price action doesn't "build" from smaller into larger timeframes in the way that newer traders assume. On the other hand, rest assured that all information you need to make profitable trades can be observed on a single timeframe.

Like any other rule of thumb there are caveats, modifications and exceptions, but it's the sort of thing you need to discover on your own after many years - and after attaining proficiency at trading a single TF.

Of course, you can use multiple timeframes as a way to search for additional trades - for instance, you can go long an instrument based on a daily setup while shorting (or going long even more) based on a 60 minute setup. But these should be executed and managed as entirely separate, unrelated trades.

 

[konviction]

I use a 1min, 15min, 1hr and daily when day trading.

I trade gaps so the first hour is very important so I take all my trades off the 1min, however before I decide what direction to take, I'll look at the 15min to see what kind of candles are forming and how bullish or bearish the chart looks.

This is like looking out your window you gauge the weather, but then consulting the weather channel to see what the weather do over the course of several hours. So obviously you wouldn't plan a hike if it's supposed to rain, but simply looking out your window, you can't tell whats ahead.

Charts are the same way. Use longer time frames to see the forecast of where the stock may go.

After the first two to three hrs of trading I'll pay more attention to the 1hr charts to see how the stock might perform the rest of the day and decide if I need to plan long or short trades based off that information.

hope that helps.

 

[relocate]

Try to find an 'optimal' TF instead.Which depends on RTH of the instrument,range,volatility,etc...For e.g.,put zigzag indicator and see what`s possible to catch at this particular day and hour.

 

[SmartAlpha]

Quote from neksor:

Hi there,

Additionally, how would one represent a higher time frame? (i.e daily bar could be represented by a 480 minute bar for an 8 hour trading session or a daily bar)

Key point to understand is that if you are using indicators based on history, your choice of representation (= calculation unit) has an influence on the indicator value.

An indicator based on 480 1-minute bars will paint a different picture than the same indicator based on 8 60-minute bars...

 

[brisvegas]

LAWS OF MULTIPLE TIME FRAMES

1. Every time frame has its own structure.
2. The higher time frames overrule the lower time frames.
3. Prices in the lower time frame structure tend to respect the energy points of the higher time frame structure.
4. The energy points of support/resistance created by the higher time frame’s vibration (prices) can be validated by the action of lower time periods.
5. The trend created by the next time period enables us to define the tradable trend.
6. What appears to be chaos in one time period can be order in another time period.

 

[murray t turtle]

Quote from brisvegas:

LAWS OF MULTIPLE TIME FRAMES


2. The higher time frames overrule the lower time frames.

6. What appears to be chaos in one time period can be order in another time period.

====================
Good 2 points;
i like to study all the data on monthly candle charts/swing /position trade.

Yearly charts can help;
30 minute can help for entry exit, position/swing trades.

Interesting that many swing and day traders consider 5 minute candles ''noise''

Context is important;
bull market/support rules generally or bear market resistance rules generally.Wisdom is profitable to direct.