The goal of Multi-Time Frame Analysis is to “see the forest through the trees” – before entering a trade based on a given setup, you should always have a broader view of where the market is in relation to trend. By examining price action in different timeframes, we can identify potential entry points within a given price advance/decline and assist in timing these moves.
Multi-time frame analysis (also known as multiple time frame analysis) enables traders to focus on trade timing and helps identify when trends may be reaching exhaustion.
Too many time frames render useless results in the Multi-Time Frame strategies. Some make the mistake of attempting to time entry/exit when all time frames line up with a signal- which rarely occurs.
The multi-time frame analysis allows traders to focus on trade timing while also identifying when trends may be reaching exhaustion.
Scaling down in timeframes? Use a 1:4 to 1:6 ratio between the trigger and trend timeframes.
If you are trading off the four-hour chart, look for trend analysis on the daily chart.
If you want to trade off the one-hour chart, look at the four-hour chart for trend analysis.
Recognize when you’re trading against the trend – The near-term picture frequently provides setups against the primary trend.
It is critical to approach these trades with greater caution, which means lower leverage and more conservative stops.