.: Trading Using Multiple Time Frames
Category:Home / Finance / Stock Market Investing
Why do we need to Trade Using Multiple Timeframes?
To improve the efficiency of our trading strategy. We see the major Trend using a higher time frame than what we intend to use & a lower Time frame to enter a trade.
Say we want to trade using the Daily Charts. We take the Weekly charts to see the major trend. Suppose it’s an uptrend in a Weekly chart. We will tend to trade only long positions. We will use entries in the daily charts to enter long positions only. When sell signals are generated we will just exit our long positions. I.e. we don’t short sell.
Suppose it’s a downtrend in a Weekly chart. We will tend to trade only short positions. We will use a entries in the daily charts to enter short positions only. When buy signals are generated we will just exit our short positions. I.e. we don’t enter long positions.
Now that we are using two timeframes. Now coming to timing the entry of trades or adding additional positions. (Pyramiding) We can further use a Hourly chart to time our entries. Supposethe weekly & daily charts are in a uptrend. We will enter a long position or an additional long position when a hourly chart gives us a buy signal. Supposethe weekly & daily charts are in a downtrend. We will enter a short position or an additional short position when a hourly chart gives us a sell signal. This timeframe would not be used to exit the trades. It’s solely to improve the timing for entry. For exits we would use the signals generated in the daily charts.
Using multiple time frames to trade
We take three charts of the same security. First is the weekly chart. Next chart is the daily chart. Third chart is the hourly chart.
We will now use the daily chart to trade. We check the weekly chart for the weekly trend. Lest assume the weekly trend is up. So based on this information we will just trade long positions in the daily chart.
We look for a buy opportunity in the daily chart or we can see the hourly chart to enter a long position.
Now for entering additional positions we use buy opportunities in the hourly chart. We would exit based on the daily chart only, because we were trading based on the daily chart.
Similarly we can trade short where weekly charts are in a downtrend and daily chart generates sell opportunity. Additional positions are entered whenever sell opportunities are generated on the hourly charts.
For Day trading we can use the Hourly, 15 Min and 5 Min charts here we trade the 15 Minchart. Or we can use 15 Min, 5 Mins and 3 Mins charts here we trade the 5 Mins chart.
Good Luck and Happy Trading.
Article keywords: charts, signals, timeframe, buy, sell, trend
Article Source: http://www.articles32.com
Umashankar Galla is a Technical Analyst with an experience of 11 Years .Trades & Invests in Indian Exchanges. He is developer of the Trading System "USG My Analyst". A precise trading system to trade Intraday or End of Day.
Website : www.technitraders.com/
Forums at: www.technitraders.com/forums/
Mail at : info@technitraders.com
.: New Stock Market Investing Articles
1). Difference Between Paper Trading And Live Trading!
Both paper trading and live trading are important steps to accumulate wealth through stock investments.
2). Stock Index Funds - What Is An Index Fund?
You may have heard of the term before, financial indexes, but just what exactly are they. Indexes, also known as stock market indexes, are the listings of stocks and any statistics that show a full of value of any given stock in the index. These indexes are generally used to show the character of all the stocks taken together.
3). Stocks - How To Know When To Sell
Stocks can be a great investment. Most people don`t really know when it`s time to sell though.
4). Some Fundamentals of Option Trading
Option trading is an ever increasingly popular form of investment. The wide spread use of online option trading has led to many newcomers to these risky, but potentially profitable opportunities. The following is a review of some of the fundamentals of Option Trading.
5). Future Option Trading - A Brief History and Overview
Future Option Trading is similar to the Stock Options Trading in many ways, but there are also some major differences. Some of the terminology used in Futures Trading also has a different meaning than the same term when applied to Stock Option Trading, and caution must be used to avoid confusion.
6). A Sample Option Trading Strategy
When you feel you understand a bit about the Options Trading Market, and are ready to give it a try, you need to spend a bit of time developing a strategy to guide your investment decision. It is important in doing this to understand the basic difference between a strategic decision and a tactical decision.
7). Fibonacci and Golden Ratio
The Fibonacci numbers Golden ratio can be used to describe the proportions of everything from nature to smallest building blocks. This is used by many successful investors to pick trends in the charts.
.: Top Stock Market Investing Articles
1). James Dines Predicts a Buying Panic in Uranium
Over the years, Dines successfully forecast the Internet mania, forecasting the giants of the tech boom, and forecasting the tech bust. A gold bug again, Dines also added uranium as the metal to watch over the coming years, saying, “This is my way of playing the whole coming energy boom."
Interviewer: You have been calling a bull market in uranium and, once again, you were the first voice in the now-growing crowd of uranium bulls.
2). Interesting Historical Facts About The Stock Market
Did you know that the 1987 crash was worse than the 1929 crash?
3). Openwave-Could the little company ever become king?
Openwave has a very unique and valuable business in the wireless data market. It has a dominate market share of 50% in both the browser and in the gateway transitions for mobile phones. Both products are a core element in the data cell phone market.
Our philosophy is to own the critical elements in markets that appear to have revolutionary growth. In January 2004 we wrote an article saying the wireless revolution has begun.
4). A Man Who Turned a $15,000 Stock Account INTO $3,296,000 Million AND WHAT I Learned From It
The lessons I learned from a trader who turned a $15,000 account into over $3 Million with JUST two stock trades.
5). Option Trading Tip - Buy Deep In-The-Money Options
Time decay and volatility are responsible for many a broken option trading account. Discover how to neutralize these 2 forces and achieve more consistent profits!
6). The Grand Daddy Boom in Uranium
Approaching his 50th year in the uranium business, the quiet but assertive Chairman and Chief Executive of Uranium Resources (OTC BB: URIX). Paul K. Willmott talked to us about the current uranium bull market. Willmott discussed the third uranium bull market he’s experienced with both exuberance and caution.
Interviewer: How do you feel about the rising.
7). Why Is Eric Sprott A Uranium Bull?
Eric Sprott may be Canada's answer to Warren Buffet. He's got the Midas Touch and currently manages more than $3 billion. We talked to Eric Sprott about uranium and why he is bullish on nuclear energy.
Interviewer:
Uranium had been inching higher from 2001 until a year ago. Since then, it has soared up the price chart. What is a realistic price for uranium and how high can you envision it reaching?
Eric Sprott:
There is obviously a shortage between current mine production and current uranium consumption.