I operate with three timeframes:
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Higher Timeframe – Defines the S/R structure within which the trading timeframe moves.
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Trading Timeframe – This is used to define the trend, market bias and to identify setup locations.
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Lower Timeframe – This is used to fine-tune my trading timeframe analysis and to time entry and exit decisions.
I trade the middle of these three – the Trading Timeframe.
One danger that I see in reader emails, when traders attempt to manage multiple timeframes in this same way, is allowing their focus to be caught up in the detail of the lower timeframe.
I get it. The lower timeframe is where all the action is happening. It’s fast. It’s exciting.
If the market is flowing smoothly, it may work out great to take all the lower timeframe triggers. But more often than not, focusing too much on the lower timeframe is simply a recipe for overtrading. You’ll catch the good trades. But you’ll also take quite a few mediocre trades that just weren’t in good setup locations on the trading timeframe chart.
If you find this occurring, try minimising your lower timeframe chart. Keep it hidden to ensure focus on the trading timeframe. Open the lower timeframe chart when required to fine-tune your analysis. And again when price has moved into a trading timeframe setup area. At all other times, keep it hidden.
FOCUS on the trading timeframe to determine the trend and bias, and to identify trade setup opportunity.
Only move to the lower timeframe to fine-tune your trading timeframe analysis (if needed) and for working entry and exit orders.
Another example:
These examples make use of YTC Scalper style lower timeframe charts.
But it doesn’t matter whether you’re using this method, or the YTC Price Action Trader method, or any other multiple timeframe approach.
Focus on the TRADING TIMEFRAME for trading decisions.
And it doesn’t matter what range of timeframes you choose to trade.
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Weekly / Daily / 4-Hour – Your setup and trade locations are identified on the DAILY chart.
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4-Hour / 1-Hour / 5-Min – Your setup and trade locations are identified on the 1-Hour chart.
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30 Min / 3-Min / 1-Min – Your setup and trade locations are identified on the 3-Min chart.
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5-Min / 1-Min / 2-Range – Your setup and trade locations are identified on the 1-Min chart (as per the examples in this article).
Each timeframe has a specific role.
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Higher Timeframe – Defines the S/R structure within which the trading timeframe moves.
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Trading Timeframe – This is used to define the trend, market bias and to identify trade opportunity at setup locations.
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Lower Timeframe – This is used to fine-tune my trading timeframe analysis and to time entry and exit decisions.
Be sure to focus on the right timeframe at the right time. Avoid the temptation to focus solely on the faster and more detailed action of the lower timeframe.
Happy trading,
Lance Beggs