Hello guys.
Today we're going to talk about Time Frames.
Understanding Time Frames is very important and it's a very powerful tool for you to be
successful in your trading.
We're going to talk about what Time Frames are and in the end I am going to show you
how multi Time Frame trading is done.
So what is a Time Frame?
The Time Frame you select determines how much time is printed in every one of your trendbars,
in your chart.
Let's go back to cTrader and Iam going to show you exactly what I mean here.
We have plotted a EURUSD chart, the Time Frame selector is inside the chart, it's here, if
we select one minute time frame, then each of these trendbars is going to represent one
minute of data.
If we change that to 30 minutes then each one of these bars, represents 30 minutes.
That means that the hole chart we are seeing here is a lot longer period than the previous
one because, if every bare represents 30 minutes, it goes back some days.
If it's just one minute it goes back to a day.
So that is what Time Frames are, now we're going to talk about the reasons why we use
Time Frames.
The most important reason to use different Time Frames, is because the Time Frame that
you use determines your trading frequency.
If you have a trading system that has different entries, different exits, different technical
analysis, this analysis that you are doing can be done on any Time Frame, so the trading
system can remain the same but by changing the time frames you will change your trading
frequency.
I am going to show you this in cTrader with an example.
I plotted here some charts, some EURUSD charts, the first EURUSD chart shows 8 ticks, so each
one of the trendbars represents just 8 ticks.
Let's assume that we have a trading system here a simple trading system that we trade
in the direction of a moving average cross over and we enter on the lower bollinger band
for an uptrend, and on the high bollinger band for a downtrend.
So we're going to have one singal here, which is at 12 of March, then we're going to have
again a singal on the same day, then again a singal on the same day, and it goes on,
multiple signals on the same day.
If we move to 5 minute charts, we're going to see that the signals are still on the same
day, we have a singal here for example and a signal here, but there are far less signals
on the same day, if we move to a one hour chart, still having the same trading system,
we're going to see that we have a signal at the 27th and then a signal on the 4th and
then another singal on the sixth and you see that we have one singal per, a number of days
so we receive some singals in one week and if we move to a daily chart, same thing you're
going to see that we have a signal per month or something.
So what time frame should you use depending on the trading frequency that you want?
If you're a scalper that means that you're going to be trading a lot of times per day,
and that you're getting a small amount of pips for each trade, you should be using tick
charts or you should be scalping trend bars, that are up to 10 minutes trendbars.
If you are a day trader that means that you trade multiple times during the day but you
want to close all of your positions before the end of the day, before 12 o clock at night,
you should be trading from 1 minute charts up to 5 minute charts.
If you are like a swing trader trading some trades per week you should be trading from
15m charts up to 1h charts, up to you, and if you are more long term trader you should
be trading on 1h charts or above.
If you are a trader that trades only a few times per year you can even trade weekly charts.
The main reason why we use time frames is because in trading one very important principle
that most of the traders follow is you want to trade with the bigger trend.
So what is that bigger trend how do you acknowledge it?
You select what Time Frame you want to use based on your trading frequency like we said
before.
Then what you do is you go to some Time Frames higher than your main Time Frame and you see
the overal trend there.
Then what you do is you go back to your trading Time Frame and you take only the signals that
go with the direction of the higher trend.
I am going to show that in cTrader, we have the same charts that we had before here, we
have a daily chart and we see that in the daily chart the trade is long, we can draw
a trend line, we can have moving average cross over, it doesn't matter, so what we are doing
is, if our one hour chart is our main chart for our trading frequency, we get the long
term from the daily chart and we only take the long singals in our one hour chart.
The next important reason to use time frames, is to fine tune your entries.
this is the opposite of what we talked about before, going to the higher Time Frame, now
what we are doing is, we have our main Time Frame, which we get our entry signals, but
however to enter the market in the best possible price, we go to a smaller Time Frame, and
we do our technical analysis there to fine tune exactly to pin point exactly the spot
that we are going to enter to get the best possible price, the best possible scenario.
I am going to show that again in cTrader, now in this case we have the 1h chart, and
we, what we do is, let's say that we have a, we actually don't have a signal now but
let's assume that we have a short singal now.
What we're going to do is we are going to go, even tho the short signal is on the one
hour chart, we're going to go to the 5 minute chart, which is a completely different chart
and we're going to do our techncial analysis here, we're going to find our support and
resistance levels or we're going to draw our indicators, or we're going to draw our trend
lines here and we are going to find the most appropriate place to enter.
We are going to get the best price.
This chart is not a good representation of what I wanted to show you unfortunately because
the price is spiking, but anyway you get the idea.
The final important reason why we use Time Frames, that I want to show you is to get
better extis.
It's very difficult especially if we are trend trading, to be finding good exits in our main
Time Frame because often when a trend is developing there are no resistance levels, the trend
is just developing.
If we however go to the higher Time Frame, it's easy to find resistance levels, plot
previous support and resistance lines and look at more data, to see our Targets.
I am going to show you that in cTrader actually this time I am sure I can show you what I
mean.
So I am here on the m5 time frame, like I was before, and let's say that I have entered
long, to get this trend.
But as you can see the trend will just continue, I have no support, no resistance levels, no
nothing, I have no exit.
What I can do is I can go to the higher Time Frame , this is a 1 hour Time Frame and now
I see more data, so look I immediately see my resistance here, in this chart it's just
this resistance point some other chart is going to be better signal even, but you understand
the point, in the 5 minute chart I have no exit, I don't know where I am going in this
chart I see more data Ican find my resistance point, and with another chart I would have
shown you better what I mean.
Now I am going to show you how you are going to put all these principles together, in order
to perform Multi Time Frame Technical Analysis and Multi Time Frame Trading.
Let's recap, what you do first is you select your main Time Frame for your main signals,
for your trading frequency, then you select a higher Time Frame and then you select a
lower Time Frame.
Some traders say that the distance between the main the higher and the lower should be
equal, so equal distance between main and higher and equal distance between main and
lower, but I would say that, you should do whatever you want, find the time frame that
suits better your trading style, and your trading frequency and you're going to do good.
I am going to show you in cTrader how to do multi Time Frame analysis using more "proper"
charts that I used before so, let's go to cTrader let's see here I have drawn three
charts.
My main chart for my trading frequency is the m15 chart, the 15 minute chart, then Ihave
drawn my higher Time Frame to be the 4 hour chart and my low time frame to be my one minute
chart.
So let's say exactly what we are doing when doing multiple Time Frame Analysis, like we
explained before.
I start from the 4h chart, and what I do, I see the overal direction of the trend.
The direction here is long obviously, the trend is going up I can also draw my trendline
to get some trading signals or I can even, it was a Trend Line that was broken, then
trend got weakened.
Or you can even use a moving average cross over to show you the direction that you want
to go.
See in this case the slower moving average is higher than the fastest moving average
is higher than the slower moving average, so my direction is long.
Like we said before the fact that my direction is long on the higher Time Frame means that
I am going to get only long singals in my main Time Frame.
So I go back to my main Time Frame and I do the same type of analysis or do a different
type of analysis, to get my signal, it doesn't matter but in this case I have drawn a trend
line and I see that my trend has just broken so It's a very good place to enter long, for
my long trade.
But I am not going to enter just yet.
What we are going to do is we're going to do what we talked about before, we're going
to go to the one minute chart, the small chart, to fine tune our entry.
So in this 5 minute chart, we have a very simple technical analysis indicator, we just
have bollinger bands.
In order to get the best possible price for our long singal we want to get it as low as
possible.
So what we do here, is we see the places that the price is on the low bollinger band, if
we want to enter long, or on the high bollinger band if we want to enter short.
So what I understand is this is a very good place to enter, so I can make a limit order
here, and of course the price is going to be going higher as the price progresses so
I need to be moving my limit order, or I can make a robot that's going to automatically
do my entry here, that doesn't matter, or I can just wait for the price to reach the
lower bollinger band.
What matters is that I have shown you exactly the thought proccess.
I find the higher Time Frame, then I go to my main Time Frame, then I see my entry singal
then I fine tune my entry to my small Time Frame, and again, you can like I mentioned
before, use the higher Time Frame for your exit because in your main Time Frame it's
very hard to exit especially in trends, however on your high time frame it's very easy to
understand a good exit, so this is a very good exti for example for your trade, you
see that it's way below the previous high so even if you have trend, or you have a range
and this is the bottom of the range you're going to reach that level.
We can even close as a mean reverse here on the moving average.
This is also a very good exit, you get a good risk to reward ratio, if you put your stop
loss, you go here you put your stop loss below, on you main Time Frame, you put it below the
swing, you have 24 pip stop loss, you have a 101 pips take profit so this is a good trade,
it may turn out good we may make some money here.
There is actually no limit in the amount of charts that you can use, even tho I strongly
recommend using just 3 charts.
Using more chart is going to, there is a good chance that it's going to confuse you a lot
and you're going to have a problem, it's going to have the opposite effect, you're going
to be confused instread of getting some value out of multi Time Frame Analysis.
In this video we talked about what Time Frames are so by now you should know exactly what
a Time Frame is.
I showed you how to do multiple Time Frame analysis, and just remember that multiple
Time Frame analysis can be complicated for some traders, it's not something that you
have to do, it's just another technical analysis tool which is very powerful if you know how
to use it properly.
Just remember not to be using too many charts, don't get confused, don't overdo it, don't
use a lot of charts with a lot of complicated technical analysis in them, it's not going
to give you any more value.
In the next episode we're going to talk about chart patters, and if you liked this video,
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So thanks for watching.